Critics say the demand for mortgage-backed securities backed by subprime mortgage loans led originators to loosen their underwriting practices, with a resulting increase in delinquencies and foreclosures.

But those engaged in the business of pooling and securitizing mortgage loans say that making investors liable for the practices of loan originators would chase investment capital out of the secondary market, raising the cost of borrowing for consumers.

Existing law largely protects investors in mortgage-backed securities from class-action lawsuits by borrowers who claim they were the victims of illegal or abusive lending practices.