Stricter Mortgage Rules Proposed

A new program will allow homeowners who are 90 or more days overdue on their monthly mortgage payments to be given the opportunity to put the foreclosure process on pause for 30 days while lenders try to work out a way to make the mortgage more affordable to the homeowner. (AP/Stockton Record)
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Washington (AP) Economic policymakers are recommending stricter regulation of mortgage lenders. The proposal is part of a broad effort to prevent a repeat of a credit crisis that's threatening to drive the country into recession.

Recommendations from a presidential advisory group on financial markets cover mortgage lenders and other institutions, as well as investors, credit ratings agencies, and regulators.

Treasury Secretary Henry Paulson, who leads that group, says the effort is not about “finding excuses and scapegoats.” The suggested actions, he says, are intended to avoid another meltdown in the credit and housing markets.

The group's report says federal and state regulators should strengthen oversight of mortgage lenders.

Other recommendations urge improvements by credit rating agencies and clearer disclosures and assessments of risks on investments.