US calling for stricter regulation of mortgage rules

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by Kay Murchie

Plans have been revealed by US financial policymakers to enforce plans for tougher mortgage rules as the US is grappling with the worst housing crisis for years.

Following the weakening in the US housing market and an increase in mortgage defaults, many experts are blaming lax and excessive lending policies.

The US housing market hit problems after hikes in interest rates and many borrowers saw their fixed-rate mortgages expire.

US Treasury Secretary Henry Paulson, who leads President George W Bush’s advisory group, said any changes were aimed at making the market more efficient and stable. The objective here is to get the balance right, added Mr Paulson.

Regulation needs to catch up with innovation and help restore investor confidence but not go so far as to create new problems, make our markets less efficient or cut off credit to those who need it.

Recommendations in the group’s report include strong nationwide licensing standards for mortgage brokers as well as stricter state and federal oversight of mortgage lenders.

The group includes bosses of the Federal Reserve, Securities and Exchange Commission, and the Commodities Futures Trading Commission which was introduced following the 1987 financial crash.