Remember that recent financial system bump in the road we just had a few years ago? It had something to do with monetizing bad/risky mortgages in an increasingly rising real estate pricing market that suddenly dropped?
Update 10-29-2014: US regulators (including FHFA, FDIC and others) have agreed to relax US mortgage restrictions to become effective in the fall of 2015 by eliminating the need for 20% down payment. They also loosened the requirement of lenders to hold back 5% of the loan as long as they verify the borrower has the ability to repay the loan and their debt to income ratio doesn’t exceed 43%. Another agreement between FHFA and lenders is the type of circumstances that will require loans to be repurchased or levy large penalties on lenders years down the road if mortgages default.
Update 10-15-2014: By the way, reports that regulators will relax mortgage restrictions abound.
By the way, here’s the US Office of Inspector General’s semi-annual report on the impact of the bad mortgage loans http://www.hudoig.gov/sites/default/files/documents/SAR71.pdf
Well, recent news just revealed Washington DC “Policy Makers” (whoever they are – maybe the SEC-Congress-Lobbyists-CFPB – and all the above) are contemplating relaxing the 20% down payment requirement of borrowers and 5% holdback by lenders/banks on mortgages…when defining the qualified residential mortgage (QRM) rules. Source: WSJ, 6-11-14, Page C2.