Editor: David Reiss
Brooklyn Law School

August 16, 2013

New Mortgage Rule Said to be Proposed at End of August

By Gloria Liu

U.S. regulators will propose a new version of a rule requiring lenders to keep a stake in risky mortgages that they securitize in the last week of August.

Currently, the draft regulation numbers 500 pages and will be written by a panel of six agencies. It will replace a more stringent proposal for the Qualified Residential Mortgage rule.

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 Mae and Freddie Mac.

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