usa wants tougher mortgage rules 
14 March 2008 
 
Economists are still trying to work out when the housing wobble will end.  The move comes after the US housing market weakened, and mortgage defaults surged, with many critics blaming lax and excessive lending policies.

US Treasury Secretary Hank Paulson said any changes were aimed at making the market more efficient and stable.

The plans were unveiled by the President's financial advisory group.

"The objective here is to get the balance right," said Mr Paulson, who leads President George W Bush's advisory group.

"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."

The US housing market got into trouble after interest rates rose and many borrowers came off fixed-rate mortgages.  As their repayment costs climbed, so did the number of people defaulting on their home loans, especially in the sub-prime sector which focused on clients with low incomes or poor credit.

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 working group includes bosses of the Federal Reserve, Securities and Exchange Commission, and the Commodities Futures Trading Commission, and was set up in the wake of the 1987 financial crash.
 
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