As Washington confronted the future of American housing on several fronts Tuesday, there was no doubt that getting a home loan is going to be tougher unless a borrower has pristine credit and a hefty down payment.
U.S. bank regulators decided to propose a high standard for home buyers to get the best mortgage rates: Only those who can make a 20 percent down payment and have not had problems paying mortgages in the recent past would be eligible.
The regulators announced that plan and other proposals for new rules designed to prevent the kinds of practices that dumped so many risky mortgages into the financial system several years ago.
One of the key new regulations would require mortgage lenders to invest in the loans they make, so that if the loans went bad, the lender would suffer. In the years leading up to the financial crisis, lenders could hand off loans, many of which were high-risk, to other companies for a fee. Without skin in the game, they could then continue to make risky loans.
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