Is 30% Down Payment A “Safe” Loan For Regulators?

Regulators are eyeing mortgage amounts that are 70% or less than the value of a home as “safe” following a proposal from Wells Fargo. This is an important threshold because it could be the break point for a new rule that’s yet to be implemented. The rule, part of the Dodd Frank bill, says that a loan originator can’t sell their entire portfolio of loans—they’d have to retain 5% so they have some skin in the game. But the rule is still under debate because of this new proposal (and others) to make an exception to the rule for “safe” mortgages of 70% loan-to-value or less. Here’s a good WSJ story on the topic.