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 itâ€¦if you were a 20-something making mortgage loans in California using someone elseâ€™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 â€œâ€œ11-agency, 8-week review of servicer practices, with hundreds of investigators crawling all over the banksâ€ proves that the latter to be pure regulatory theater.