Fed Proposing New Mortgage Regulation To Reduce Risks

A new regulatory proposal offered Wednesday is trying to ensure that the country’s housing-finance system is protected from another mortgage meltdown.

The plan from the Federal Reserve and five other regulators calls for lenders to keep a 5% stake in the credit risk for certain securitized loans that don’t meet “qualified residential mortgage” standards.

These QRM loans are designed to be particularly safe by making sure that borrowers can afford their mortgages. The idea behind the rule is to force lenders to have “skin in the game” when they make and securitize loans that don’t meet QRM standards.

MarketWatch

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