New Mortgage Lending Rules

The housing news keeps getting worse. Prices are still falling for housing in major American cities. The number of foreclosures in 2011 is expected to exceed the number of 2010.

And we have new regulations on mortgage lending to insure that originators of mortgage loans have a stake in those loans getting paid back.

Alan Zibel reports: WASHINGTON (Dow Jones)–U.S. bank regulators on Tuesday unveiled a long-awaited proposal to overhaul the market for securities backed by mortgages and other assets, a piece of the financial system battered by the recession and financial crisis.

The proposal approved for public comment by the Federal Deposit Insurance Corp.’s board is designed to encourage safer lending practices by mandating that issuers of mortgage-backed securities either follow conservative principles or hold a portion of the loans on their books. Companies that package loans into securities would have to hold at least 5% of the credit risk, unless the loans meet an exemption for high-quality loans.

The exemption would apply to loans with a minimum 20% down payment, but the proposal also requests public comment on an alternative approach that would allow for a 10% down payment and mortgage insurance.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (, he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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