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Bankers dismiss concern over exotic mortgages
WASHINGTON -- March 31, 2006 -- In
separate letters to U.S. bank regulators, the Mortgage Bankers Association and
America’s Community Bankers warned that too many lending rules would limit
innovation.
The letters were in response to requests for
public comment after multiple government offices in December issued guidelines
concerning exotic or risky loan products.
"The private market can and does correct for
excess risk more quickly than can a regulator who necessarily must move at a more
deliberate pace," the mortgage lenders' group wrote.
The community bankers’ group objected to
suggestions that bankers should offer borrower’s guidance.
"While it is the lender's responsibility to
provide borrowers with sufficient information for them to clearly understand the
loan terms and associated risks, we do not believe it is appropriate or possible
for the lender to identify or dictate the best mortgage product for individual
consumers," the group wrote.
Source: Reuters News (03/29/2006)
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