{"id":5146,"date":"2011-04-16T00:00:00","date_gmt":"2011-04-16T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2011\/04\/skin_in_the_game_mortgage_rule"},"modified":"2022-04-04T13:19:45","modified_gmt":"2022-04-04T18:19:45","slug":"skin-in-the-game-mortgage-rule","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/skin-in-the-game-mortgage-rule\/","title":{"rendered":"\u201cSkin in the Game\u201d Mortgage Rule Announced by Federal Regulators"},"content":{"rendered":"

Federal regulators are proposing new risk retention rules geared toward reducing risky low mortgage lending. The \u2018skin in the game\u201d rule was articulated in the Dodd-Frank Consumer Protection Act, which mandates credit risk sharing and for mortgage-backed securities (MBS) sponsors and those of other asset classes to align their interests with investors.<\/p>\n

Under the new qualified residential mortgage rules, lenders would have to retain 5% of the risk, known as \u201cskin in the game,\u201d for non-qualifying loans that they make rather than selling all of them to investors. The loans would likely include higher mortgage costs. Loans sold to Freddie Mac or Fannie Mae, however, would be exempt from the rules as long as they remain in government conservatorship. Loans through the Federal Housing Administration would also be exempt.<\/p>\n

A qualified residential mortgage (QRM) is a mortgage that regulators consider to be a loan that offers a low risk of default. Some of the requirements for qualifying for a QRM loan:<\/p>\n

\u2022 Placing at least a 25% down if you are buying a house.
\n\u2022 Having at least 25% equity to refinance.
\n\u2022 Having at least 30% equity for cash-out refinancing.
\n\u2022 No 60-day delinquencies over the past two years.
\n\u2022 Not being able to get a loan with interest only payments, negative amortization, or “significant interest rate increases.\u201d<\/p>\n

Our securities fraud lawyers <\/a>represent institutional investors who have lost money from investing in mortgage-backed securities or other investments.<\/p>\n

Related Web Resources:<\/strong><\/p>\n

Bankers pleased with \u2018skin in the game\u2019 rule<\/a>, Marketwatch, March 29, 2011<\/p>\n

More Blog Posts:<\/strong>
\nGoldman Sachs Group Made Money From Financial Crisis When it Bet Against the Subprime Mortgage Market, Says US Senate Panel<\/a>, Institutional Investors Securities Blog, April 15, 2011<\/p>\n

Bank of America and Countrywide Financial Sued by Allstate over $700M in Bad Mortgaged-Backed Securities<\/a>, Stockbroker Fraud Blog, December 29, 2010<\/p>\n

Citigroup\u2019s $75 Million Securities Fraud Settlement with the SEC Over Subprime Mortgage Debt Approved by Judge<\/a>, Stockbroker Fraud Blog, October 23, 2010<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Federal regulators are proposing new risk retention rules geared toward reducing risky low mortgage lending. The \u2018skin in the game\u201d rule was articulated in the Dodd-Frank Consumer Protection Act, which mandates credit risk sharing and for mortgage-backed securities (MBS) sponsors and those of other asset classes to align their interests with investors. 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