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MORTGAGES

Regulators loosen down payment rules

Buying a home may have gotten a little easier this week. The government is loosening some financial rules, hoping to inject more life into the country’s still-recovering housing market.
Banks and borrowers stand to benefit from new rules unveiled Tuesday by six federal agencies. While banks will see relaxed guidelines for packaging and selling mortgage securities, fewer borrowers likely will need to make hefty down payments.
The board of the Federal Deposit Insurance Corp. voted 4-1 to adopt the new rules, and two other agencies approved them as well. The Federal Reserve has scheduled a vote for Wednesday, and two other agencies are expected to adopt the rules soon.
The 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 include the less stringent condition that borrowers not carry excessive debt relative to their income.
The rules for the multitrillion-dollar market for mortgage securities will take effect in a year. For other kinds of securities such as those bundling together auto loans or commercial loans, which don’t allow banks an exemption from the 5 percent rule, the effective date is in two years.