Borrowers would have to put 20% down on a mortgage in order for the lender to be exempt from the "skin in the game," rules, according to a proposed rule sent out for comment today by the FDIC and other regulators.
Under the rule, companies packaging loans into securities would have to hold at least 5% of the risk unless the loans were considered high quality.
Residential mortgage loans with a 20% down payment or those that have been guaranteed by Fannie Mae or Freddie Mac would be exempt from the 5% requirement. The proposal also requests comment on a proposal to allow for a 10% down payment and mortgage insurance. However, some GOP lawmakers have introduced legislation that would require Fannie and Freddie mortgages not to be exempt.
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