New US rules on banks taking risk in mortgage bonds are eased to spur wider lending

Lifestyle and Budget Associated Press

New U.S. rules aimed at getting banks to take on more of the risk when they package and sell mortgage securities are being relaxed with an eye to spurring broader home lending.

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Federal regulators have dropped a key requirement: a 20 percent down payment from the borrower if a bank didn't hold at least 5 percent of the mortgage securities tied to those loans on its books.

The long-delayed final rules unveiled Tuesday by six federal agencies include the less stringent condition that borrowers not carry excessive debt relative to their income.

The board of the Federal Deposit Insurance Corp. was voting Tuesday to adopt the rules.

The rules, proposed in stricter form in 2011, were mandated by the overhaul law enacted in the wake of the 2008 financial crisis.