Feds Consider Looser Rules for "Safe" Mortgages

Qualifying loans could be sold to investors

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.