Mortgage

Easing of lending rules a ‘victory for mortgage bankers’ and homebuyers

Small down payments won't trigger 'risk retention' requirements

Mortgage lenders won't have to retain a 5 percent "risk retention" stake when loans are securitized just because borrowers put less than 20 percent down, federal regulators said today in proposing new guidelines for "qualified residential mortgages." A previous proposal to exempt loans with loan-to-value ratios of less than 80 percent from the 5 percent risk retention requirement rattled real estate trade groups and housing advocates alike, who complained that borrowers making down payments of less than 20 percent would have to pay higher rates. Six federal agencies today issued a notice revising the rule proposed in 2011 to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new new proposal would define qualified residential mortgages (QRMs) "to have the same meaning as the term qualified mortgages as defined by the Consumer Financial Protection Bureau." The "QM" rules announced by the Consumer Financial Protection Bureau in January include "ability...