Dodd stands firm on exemption on mortgage lenders
WASHINGTON (Reuters) - Christopher Dodd, the top senator negotiating a landmark financial regulation overhaul bill, on Tuesday stood by his position to include an exemption for low-risk home loans from a broader rule requiring lenders to maintain a financial interest when securitizing loans.
The position by Dodd, chairman of the Senate Banking Committee Chairman, is at odds with that of Barney Frank, chairman of the House Financial Services Committee. Frank wants to eliminate the exemption for such mortgages from new stiffer rules.
The provision, known as "skin-in-the-game," would force loan originators and securitizers to retain in their portfolios at least 5 percent of the value of loans they make, rather than shifting all of the risk down the chain as the debt gets resold.
Dodd also rejected a bid by House counterparts to scrap a provision that would require U.S. regulators to consider alternate forms of risk retention for the commercial mortgage-backed securities market.
The Senate and House must agree to a deal for them to be included in the final legislation.
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