Earlier this month, commercial mortgage broker William J. McCloskey told IT Business Edge that Sarbanes-Oxley should apply to the mortgage industry because subprime loans are issued as asset-backed or mortgage-backed securities. He seemed somewhat discouraged, however, that Congress and at least one state legislature appeared less than interested in his research on the matter:
...I gave testimony before the Pennsylvania House Commerce Committee on May 11, and I did not get many questions after I gave my statement. I've also contacted Congressman Barney Frank's office several times, and I've not heard from them. I think it's a shame that a law is already on the books that could force mortgage executives to retrain their loan officers to pitch programs that are better suited to their customers, and it isn't well known.
Well, maybe Congress will pay a little more attention now. Yesterday, the Securities and Exchange Commission told the U.S. House Financial Services Committee that it has launched 12 investigations into securities backed by sub-prime mortgages for fraud. According to the Los Angeles Times, the investigations address
...collateralized mortgage obligations, which have a similar structure and include securities backed by pools of sub-prime mortgages, which are made to people with poor credit or high debt levels. By increasing the availability of mortgages, such investments helped sustain the recent housing boom.
No specific company was singled out as an investigation target, the story says.