High-cost loans become illegal, the law says, if they employ certain predatory practices or don't meet certain requirements: *No loan can be made "without due regard to repayment ability," determined by "independent verification" of the borrower's income, assets and debts.
Instead, the industry has advocated the creation of a national registry of brokers, more requirements on loan originators and efforts to improve borrowers' financial literacy.
Later today, President Obama will unveil a new plan to overhaul college ratings, funding requirements and loan repayment, as well as promote innovations in online learning.
Fannie Mae's requirements for loan-worthiness set the standard for the industry; loan applications that did not meet Fannie's standards were, by definition, subprime candidates.
Mathew Dunn, a lobbyist for the National Marine Manufacturers Association, said collateral requirements for loans to recreational boat dealers are higher than those for securities backed by car loans.
Minimum initial margin requirements on loans made for the purpose of purchasing securities are required in the United States by the Federal Reserve Board, under authority granted by the Securities Exchange Act of 1934.
And allowing servicers to void buyback requirements on loans they modify would eliminate any liability for breaches in representations and warranties on the loans they made to investors who subsequently bought into the pools.
Mr. Marchionne said his company was being forced to meet stiffer requirements for loans.
The Department of Housing and Urban Development is examining an unusual $6 billion deal made last year by Freddie Mac to fulfill its federal requirements on loans for affordable housing.
Unlike its Czech and Slovak neighbours, for instance, Poland did not privatise its banks until 1993, after it had imposed capital standards and requirements for loan-loss provisioning.
