Categories: Mount Kisco

Softer U.S. Mortgage Rule Said to Be Proposed at End of August | Mt Kisco RealEstate

A new version of a rule requiring lenders to keep a stake in risky mortgages that they securitize will be proposed by U.S. regulators in the last week of August, according to two people familiar with the matter.

The 500-page draft regulation written by a panel of six agencies will replace a more stringent proposal for the Qualified Residential Mortgage rule, said the people, who asked not to be identified because the plan isn’t public. The first version drew protests from housing industry participants and consumer groups when it was released in 2011.

The plan will require banks to retain a slice of mortgages when borrowers are spending more than 43 percent of their monthly income on all of their debt. The earlier version would have required banks to keep a stake in loans when borrowers were spending more than 36 percent of their income on all loan payments and in loans with a down payment of less than 20 percent. The rule will carve out mortgages backed by Fannie Maeand Freddie Mac, one of the people said.

The agencies will seek public comment before each holds a vote on the final rule. The agencies involved in the rulemaking are the Federal Reserve, Federal Deposit Insurance Corp., Department of Housing and Urban Development, Federal Housing Finance Agency, Office of the Comptroller of the Currency, and Securities and Exchange Commission.