US policy makers to propose mortgage rules revamp

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NEW YORK, Mar 13 (Reuters): US policy makers, led by Treasury Secretary Henry Paulson, will recommend a revamp of rules on credit markets and mortgage brokers, to help avoid a repeat of the recent credit crunch, the Wall Street Journal reported Wednesday.
Paulson said in an interview that the President's working group of financial markets would recommend strengthening state and federal oversight of mortgage lenders and brokers.
The plan comes as the government and the Federal Reserve seek to fix a debilitated US mortgage bond and housing markets.
Paulson is due to deliver a speech on financial markets Thursday at the National Press Club at 10am (1400 GMT).
The working group will recommend "strong nationwide licencing standards" for mortgage brokers, and call on credit-rating firms and regulators to differentiate between ratings on complex structured products and conventional bonds, the report said.
The group will recommend that issuers of mortgage-backed securities disclose more about "the level and scope of due diligence" and about the underlying assets of the securities.
Global banking regulators will also be urged to revisit the latest version of bank capital requirements, known as Basel II, to ensure banks have sufficient capital, it said.
"We are going to be mindful when we implement it to not create a burden," Paulson was quoted as saying. "But we think it's very appropriate to lay out some of the causes and some of the steps that need to be taken...to minimise the likelihood of this happening again."
The report said various government bodies had worked on the recommendations for over seven months and that Paulson and Federal Reserve Chairman Ben Bernanke had "huddled" for half a day early this month to review the details.
Meanwhile, nearly 60 per cent more US homes faced foreclosure in February than in the same month last year, with Nevada, California and Florida showing the highest foreclosure rates, a research firm said Wednesday.
A total of 223,651 homes across the nation received at least one notice from lenders last month related to overdue payments, up 59.8 per cent from 139,922 a year earlier, according to Irvine, Calif-based RealtyTrac Inc.
Nearly half of the homes on the most recent list had slipped into default for the first time.
Meanwhile, the number of foreclosed properties that didn't sell at auction and ended up going back to lenders soared more than 110 per cent last month versus February 2007, RealtyTrac said.