Dodd seeks new mortgage rules

Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) said he would introduce a plan today to overhaul mortgage-lending practices blamed for fueling record foreclosures and undermining confidence in credit markets.

Dodd’s measure would direct lenders to ensure that sub-prime borrowers were offered loans they could repay and weren’t subject to prepayment penalties.

Congress is moving to strengthen protections for mortgage borrowers after criticizing the Federal Reserve and other bank regulators for doing too little. Rep. Barney Frank (D-Mass.), who leads the Financial Services Committee, shepherded a similar bill through the House last month.