FDIC chief calls for tighter lending rules

Stricter mortgage standards - like those called for by Federal Deposit Insurance Corporation chairman Sheila Bair - may make moving a more difficult task for many consumers.

Bair told CNBC that the federal government's efforts to more tightly regulate lending are not doing enough to protect the greater U.S. economy against the threat of risky loans. Bair called for more demands from mortgage borrowers, including higher down payments and stricter income requirements.

"Clearly there is a strong correlation between the amount of skin in the game a borrower puts in up front and how that loan performs," she told the network. "And it's only common sense. Do you put 20 percent down? You're committed to that house. You walk away from that house, you're going to lose a lot of the money that you put in up front."

Today, relocating families face tighter scrutiny when they seek to obtain a mortgage for a new home. But Bair contends that not enough borrowers are being asked to prove that they can repay a mortgage. Risky loans, she said, could burden the economy, although she did not predict a double-dip for the American economy.

Increased moving activity had done what it could to improve the nation's chances for a housing recovery. A recent report by Clear Capital predicted that improving home prices have provided the economy with a buffer against a double-dip.


More News