It's no secret that mortgage underwriting has tightened considerably since the housing bust, helping to reduce defaults.
But how tight standards should be in the future — and especially the role down payments play in judging the risk that loans will go sour — has sent a debate coursing through the mortgage and housing industries and the highest levels of the business community.
Federal regulators Wednesday backed off a March 2011 proposal that included a 20% down payment in the definition of what a low-risk loan should look like when mortgages are packaged as securities and sold to investors. They hope to set a final rule soon after a 60-day comment period.
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