A majority of business economists believes federal regulators should require a high down payment on "qualified residential mortgages" (QRM) that will be exempt from risk retention.

A new survey from the National Association of Business Economics (NABE) discovered that 51% of their economists believe the maximum loan-to-value ratio on QRM loans should be 80% or less — and only 11% said it should be 90% or less.

Roughly 20% of survey respondents said the LTV ratio should be 70% or less and 8% said 60% or less.

Nearly 10% of the 263 economists surveyed by NABE during the first two weeks of February said regulators should use other criteria besides LTV ratios in defining qualified residential mortgages.

Federal regulators have tentatively agreed on a risk retention rule that would require a 20% downpayment on loans that meet the QRM test. (At this time, mortgage insurance is not a factor in determining the QRM.)

The NABE survey also asked economists their opinions on fixing Fannie Mae and Freddie Mac. A large majority of respondents said the government should continue to guarantee the MBS issued by Fannie Mae and Freddie Mac after they are privatized.

"Three fourths of respondents believe the government should only guarantee mortgage-backed securities rather than any debt that might be issued by the entities," according to a summary of the NABE survey released early Monday morning.

Only 12% of those surveyed believe the GSEs should "remain under government ownership."

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