U.S. agency proposes relaxed rules on mortgage risk, underwriting

A vacant Housing and Urban Development (HUD) home (R) is pictured in North Las Vegas, Nevada April 2, 2013.

Credit: Reuters/Steve Marcus

WASHINGTON | Wed Aug 28, 2013 11:30am EDT

WASHINGTON (Reuters) - U.S. regulators on Wednesday unveiled a reworked proposal to reduce risk in the mortgage market by requiring lenders to keep a stake in the loans they bundle and sell as securities.

The Federal Deposit Insurance Corp. approved a new version of the stricter 2011 proposal designed to limit the type of shoddy underwriting practices that fueled the housing bubble. The revised proposal would mainly require banks and bond issuers to retain a portion of mortgages when borrowers are spending more than 43 percent of their monthly income to repay loan debt.

The original plan initially drew wide criticism. The revised plan loosens the definition of "qualified residential mortgages" that are exempted from the regulations. Regulators received more than 10,000 comments on the first proposal that sparked alarm across the housing industry and among consumer groups.

Regulators originally said banks and bond issuers would have to keep "skin in the game," or hold part of securitized loans on their books, unless the mortgage included a 20 percent down payment.

In the new proposal that is set for public comment, regulators eliminated the down payment requirement for qualified residential mortgages.

Those opposed to the original proposal with the 20 percent down payment had feared the rules could restrict access to credit for some low-income borrowers.

Instead, mortgages that meet a minimum standard already approved by another regulatory agency will be considered exempt from the risk retention rules.

(Reporting By Margaret Chadbourn and Emily Stephenson; Editing by Chizu Nomiyama and Kenneth Barry)

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U.S. proposes shorter injunction in Apple e-books case

NEW YORK | Fri Aug 23, 2013 11:14am EDT

NEW YORK (Reuters) - The U.S. government on Friday offered to cut in half the length of a proposed injunction to punish Apple Inc for conspiring with five major publishers to raise e-book prices.

In a court filing, the U.S. Department of Justice and 33 U.S. states and territories recommended reducing the injunction's length to five years from 10, with a chance to seek a "limited number" of one-year extensions if events warrant.

They said this change would limit the chance that the decree could outlive its usefulness and "unnecessarily harm" Apple.

They also proposed the staggered renegotiation of Apple's contracts with the publishers, in a manner proposed by U.S. District Judge Denise Cote in Manhattan, who oversees the case.

Apple did not immediately respond to requests for comment.

(Reporting by Jonathan Stempel in New York)

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