From the NAR : NAR also has concerns about the proposed risk retention regulation under the Dodd-Frank Act that requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is a qualified residential mortgage (QRM). … Higher down payments do not have a meaningful impact on default rates; NAR supports a reasonable and affordable cash investment requirement coupled with quality credit standards, strong documentation and sound underwriting. 4c – Let’s not forget one of the main reasons we got in the mess we were/are in : (I originally noted this in 2007 ) The key reason the Subprime problem exists as it does today has to do with the wanton disassociation of risk inherent in the machine that churns out Subprime loans. … Just think about it…if you were a 20-something making mortgage loans in California using someone else’s balance sheet and being paid per loan (with no lookback to performance of the loan), how many dubious loans would you underwrite?
…The fact that HUD found extensive misconduct over a similar time frame as the Foreclosure Task Force, which Assistant Treasury Secretary Michael Barr described as a ““11-agency, 8-week review of servicer practices, with hundreds of investigators crawling all over the banks†proves that the latter to be pure regulatory theater.
