We have reviewed a new IMF staff paper on housing crises to identify emerging regulatory issues that will affect all of the U.S. actions under way to curb systemic risk in housing finance. The most conclusive part of the paper pushes back against conventional wisdom in the global regulatory community that now favors macroprudential actions like higher capital for certain mortgage loans and LTV or DTI caps. Given the influence the IMF has over global regulators, these conclusions – while not official – may curb some of the proposals under active consideration as the FSB finalizes global mortgage standards and starts work on securitization ones. The paper will also influence FSOC work on the systemic mortgage standards to come, giving U.S. institutions a platform from which to push back against some of the ideas already in full bloom in the QRM context.
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