The Federal Reserve, Securities and Exchange Commission and Department of Housing and Urban Development approved the new rules for the mortgage-backed securities market, a day after three other agencies approved the standards.
The regulators’ actions came over the objections of two SEC commissioners, who warned the rules would do little to prevent a return to the kind of lax mortgage underwriting that fueled the financial crisis.
The rules are intended to improve the quality of loans by giving banks a financial incentive to ensure mortgages can be repaid. The initial rules required that banks hold 5% of the risk of mortgages packaged and sold to investors or require a 20% borrower down payment. But regulators, concerned that overly stringent rules would harm the housing market’s recovery, backtracked on the 20% down payment.
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