Global regulators have toughened up standards for insuring home loans after defaults in U.S. mortgages sparked a global financial crisis and an industry shakeout six years on. Some insurers have filed lawsuits against banks, accusing them of falsely representing the quality of loans they were asked to insure. Many of the loans were subprime and began defaulting in 2007, triggering a chain of events that led to a global markets meltdown. The new rules have been compiled by the Joint Forum, an international group of financial regulators and central bankers after a request from the G20 group of top economies. "Mortgage origination and mortgage insurance were at the very core of the financial crisis," said Thomas Schmitz-Lippert, the group's chairman. The rules say regulators should require mortgage insurers to build long-term capital buffers and reserves to cover claims properly. Mortgage insurers and the banks whose mortgages they insure should also maintain strong underwriting standards. The
↧