House panel approves standards for mortgage-backed securities

?The Financial Services Committee's Capital Markets panel recently approved a measure that would require regulators to establish standards for mortgage-backed securities. The subprime mortgage crisis occurred as a result of toxic mortgage-backed securities being sold to investors.

The legislation is part of a package of bills from House Republicans who are searching for ways to dissolve Fannie Mae and Freddie Mac - the government-sponsored entities that own or guarantee nearly half of all U.S. home loans. Thus far, the two lenders have used more than $170 billion in taxpayer bailout money, according to Bloomberg.

Before the package of bills can be sent to the House of Representatives to be voted on, the entire Financial Services Committee must approve the measure. The goal of the legislation is to reduce the U.S. mortgage market's dependence on government support, as Republicans hope to rebuild the housing market with focus on the private sector, according to the Wall Street Journal.

The legislation was proposed by Representative Scott Garret, a New Jersey Republican, and aims to restructure the market for mortgage-backed securities that do not carry a federal guarantee. Through the bill, the Federal Housing Finance Agency and Securities and Exchange Commission would have the power to create standards for new types of mortgage-backed securities without federal backing, the source states.

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