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TAUNTON - U.S. Rep. Barney Frank praised local officials for helping more working families become homeowners Thursday and said those who stand to benefit from such programs are not to blame for the subprime lending mess that helped trigger a nationwide economic recession.

Frank, chairman of the House Financial Services Committee, said the government should create appropriate safeguards to prevent a mortgage crisis from recurring, but also should continue to encourage home ownership and construction of affordable housing.

Frank's remarks came at the annual meeting of Pro-Home Inc., a Taunton-based nonprofit that provides closing and downpayment assistance to first-time homebuyers and foreclosure counseling and financial education to consumers.

"We should not let the baby be thrown out with the bathwater because someone did irresponsible lending," said Frank, who has been criticized by conservatives for his support of mortgage giants Fannie Mae and Freddie Mac, and programs to ease the availability of home mortgages to lower and middle income buyers.

Frank said the government's job now should be to impose "reasonable regulation" like the financial watchdog agencies created during the Depression to guard against abuses on Wall Street. Frank specifically pointed to legislation he co-sponsored and was passed by the House that would require lenders to retain responsibility for at least 5 percent of every mortgage they write, rather than being able to resell mortgages in their entirety.

He said the handoff of risk by reselling mortgages wholesale on the secondary market, together with mortgage-backed securities and associated insurance policies called credit default swaps were at the heart of the mortgage collapse.

"People were selling default swaps that, because they were unregulated, they didn't have to have the cash to pay off," he said.

Issuers were willing to write such risky deals because with real estate prices increasing, they looked like a sure bet.

"They assumed they were insuring against an event that would never happen," Frank said, "something like selling life insurance to vampires."

Frank praised the role of regulated community banks in making safe loans and said virtually all of the problem lending was done by unregulated lenders "outside the deposit system."

Pro-Home is supported by local banks, developers, real estate companies and state and local agencies that assists first-time homebuyers, along with those threatened with foreclosure or seeking financial education.

During the last 12 months, the agency helped 89 clients become first-time homebuyers and provided $200,000 in downpayment and closing cost assistance to 28 buyers, Pro-Home President David Tipping said.

The resulting real estate purchases stimulated $4.6 million in new residential mortgages.

The agency, which also works to rehabilitate abandoned properties for resale to first-time buyers, is conducting a fundraising campaign to build a new headquarters for its operations.