New MBS Standards Bill Passes House Subcommittee

New MBS Standards Bill Passes House Subcommittee The House Financial Services Committee's Subcommittee on Capital Markets and Government-Sponsored Enterprises has approved a bill to establish new standards for mortgage-backed securities (MBS).

The Wall Street Journal reports that the bill, which passed on an 18-15 vote, would give authority to the Federal Housing Finance Agency and Securities and Exchange Commission to establish standards for new MBS issuances that are offered without a federal guarantee. These standards would ensure that investors are still paid even if borrowers default on their mortgages.

‘When the history books are written, today's vote will mark the beginning of the end for the era of crony capitalism that has defined our country's housing finance system for the past three decades,’ says Rep. Scott Garrett, R-N.J., the subcommittee chairman and sponsor of the new bill.

The bill will now be moved to the full committee, where it could either be voted on as stand-alone legislation or combined with other bills relating to the future of Fannie Mae and Freddie Mac.

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