Easing of Mortgage Curb Weighed

July 24, 2013
Wall Street Journal 
mortgage lending news

Regulators, including the Federal Reserve and the FDIC, reportedly want to ease a proposed requirement that banks hold 5 percent of the mortgage securities they sell to investors. Oversight agencies initially viewed the mandate -- which excludes home loans that meet certain stipulations, such as a 20 percent down payment -- as a way to avoid the problems that arose when bond issuers were not diligent about the quality of loans in their securities. They now want to relax the requirement so that it applies only to interest-only mortgages and no- or low-documentation loans. While representing a much smaller slice of the mortgage market, these products carry the greatest risk and contributed heavily to losses during the financial crisis. The regulators' about-face on the "skin-in-the-game" rules would count as a win for an unusual alliance of banks and consumer advocates that have opposed the new rules largely on the grounds that they would restrict lending. Critics also have warned that the rules would inflate costs for lenders and consumers alike, because loans that did not qualify for exemptions would bear higher interest rates.
Web Link -
May Require Free Registration

Abstract News © Copyright 2008-2013 INFORMATION, INC.
Powered by Information, Inc.

Stay Updated

Join the fight against predatory lending. Enter your e-mail to sign up for breaking news, action alerts, and CRL's original research.

   Please leave this field empty

Help Us End Predatory Lending

Predatory lending destroys family wealth, and preys on our most vulnerable communities. You can help us end abusive lending practices by donating to CRL, or by sharing our work with others.