Frank requests hearing on mortgage abuses at Ally (Reuters)

WASHINGTON (Reuters) – Congressman Barney Frank on Wednesday asked his colleagues to hold a hearing on alleged mortgage abuses at Ally Financial, a day after the attorney general from his home state of Massachusetts requested that lawmakers investigate.

"Given Ally's significant role in the mortgage business and the federal government's considerable financial investment," Frank wrote to Spencer Bachus, the chairman of the House Financial Services Committee, "a prompt investigation of this matter by the Committee is warranted."

The U.S. Treasury owns some 74 percent of Ally after a 2008 investment in the firm.

Last week Massachusetts sued Ally's mortgage unit, GMAC Mortgage, and four other top banks for allegedly pursuing illegal foreclosures and deceiving homeowners whose loans they service.

The next day Ally said it would stop buying new mortgage loans in Massachusetts that were made by correspondent lenders and wholesale brokers.

On Tuesday, the state's attorney general, Martha Coakley, sent a letter to Bachus and Senate banking chairman Tim Johnson requesting they investigate Ally's "serious misconduct."

In his letter on Wednesday, Frank, the top Democrat on the House Financial Services Committee, threw his support behind Coakley's request.

The developments come as state and federal officials attempt to hammer out a broader settlement with the banks to resolve mortgage servicing and foreclosure abuses.

As those talks dragged into their second year, Coakley filed her lawsuit and said it was taking too long to forge a nationwide deal.

A spokesman for the House committee and a spokeswoman for Ally did not immediately respond to requests for comment.

(Reporting by Aruna Viswanatha; editing by Matthew Lewis)

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Rep. Frank backs higher Fannie, Freddie loan limits (Reuters)

WASHINGTON (Reuters) – Congress should permanently extend increased loan limits on mortgages backed by Fannie Mae and Freddie Mac that are set to expire, the top Democrat of the House Financial Services Committee said on Monday.

"To have no recognition in federal policy of variations in housing prices makes no sense," Democratic Representative Barney Frank of Massachusetts said at the National Press Club. "The same level can't be right for the whole country."

He said the housing market remains fragile, and it would be "an especially bad time economically" for Congress to sidestep taking action on an extension of the October 1 deadline, when the maximum level for loans guaranteed by Fannie and Freddie drops to $625,500.

Congress raised the ceiling on the size of the loans in 2008 to help ease the credit crisis.

The higher limits, which vary by region, currently peak at $729,750 for single family homes in the most expensive parts of the country, except for Alaska and Hawaii, which have higher limits.

(Reporting by Margaret Chadbourn, editing by Dan Grebler)

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Rep. Frank helped partner land Fannie Mae job (AP)

WASHINGTON – Rep. Barney Frank said Thursday he helped his then-domestic partner land a job with Fannie Mae in the 1990s while Frank was serving on the House panel overseeing the mortgage company.

The Massachusetts Democrat said he had praised Herb Moses' qualifications when a Fannie Mae executive approached him and asked about Moses. Frank said the executive, Gerald R. McMurray, had once worked on Capitol Hill, and knew that Frank and Moses were live-in partners.

"I said, `Yeah, I think (Moses) is great. Here's his story, check him out,'" Frank recalled in a telephone interview with The Associated Press.

Frank said that was the only contact he had with Fannie Mae about Moses and the job, an entry-level analyst post. A Fannie Mae spokeswoman declined to comment.

Frank, a member of the House Financial Services Committee, was responding to a new book on the financial crisis, "Reckless Endangerment," which first reported his role in helping Moses get the job.

The book cited Moses' hiring as an example of the cozy relations that flourished between Congress and Fannie Mae as it sought to win favorable treatment from lawmakers who oversaw the lending giant.

Frank called any questions about a conflict of interest "ridiculous." Congress at the time was considering legislation to improve oversight of the mortgage agency.

The congressman said many members of Congress have spouses who work for the federal government.

"It's a very common thing," Frank said. "There is no rule against it. Washington is a very small community."

Frank said he was not a member of the subcommittee that dealt directly with legislation about Fannie Mae when Moses worked there. He also said that when the financial services panel once considered a measure that would have limited executive compensation at Fannie Mae, he simply voted "present" and made a public statement about not participating in the vote because his partner worked there.

Moses, who had previously worked as an economist at the Agriculture Department, had just gotten an MBA from the Amos Tuck School of Business at Dartmouth before he was hired by Fannie Mae in 1991. Moses left Fannie Mae around the time he and Frank split up in 1998.

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