Nine lending trade groups yesterday asked mortgage regulators to resist tightening guidelines on the low introductory-rate loans that helped fuel the housing boom.

The trade groups sent the letter in response to a request by several members of the Senate Banking Committee that regulators single out 2-28 adjustable-rate mortgages in their guidance for how lenders should explain and underwrite non-prime mortgages.

The lenders argue that regulators should not change existing rules without giving the industry time to consider changes and make suggestions.

The letter says the senators’ request “would dramatically expand” the rules on nontraditional guidance and “risk denying many borrowers the opportunity for home ownership or needed credit options.”

Among the signers were the American Bankers Association, the Mortgage Bankers Association, and America’s Community Bankers.

Source: Reuters News, Patrick Rucker (12/20/06)