A proposed rule intended to prevent the kind of reckless lending and borrowing that heaped so many toxic mortgages into the marketplace in recent years has alarmed some groups, who argue the unintended consequences could worsen the nation's housing troubles.

The plan would require homeowners to make down payments of at least 20 percent of the cost of a home.

Barry Zigas, director of Housing Policy for the Consumer Federation of America in Washington, D.C. said recently, "It's a good thing to have more equity in your house, but it's not a good thing for the federal government to set a 20 percent down payment as the gold standard of mortgage underwriting."

As proposed, the 20 percent down payment requirement, which grew out of the Dodd-Frank regulatory overhaul enacted in July, would not apply to all residential mortgages.

It is intended to apply to mortgages banks plan to package as mortgage-backed securities to sell to investors. If lenders do not require a borrower to make the 20 percent minimum down payment, the financial institutions would be required to hold at least 5 percent of the value of the loan on their books, a move to make sure they, too, would lose if a loan goes bad.

Groups that oppose the proposal say banks will either decide not to lend money to people who don't have 20 percent or will charge higher interest and fees to offset the bank's cost of holding the 5 percent reserve.

It is unclear how soon the rule would impact the housing market, if it is approved. Most home loans in this country are insured by federal agencies, such as Federal Housing Administration with its 3.5 percent down payment. Those mortgages would continue to be exempt from the 20 percent requirements.

The new rule establishing guidelines for the Qualified Residential Mortgage rule would be a complete pendulum swing from the days of easy credit, which gave birth to mortgage innovations that fueled the housing boom.

The 5 percent risk retention rule would make sure that if lenders did not require borrowers to put 20 percent down, the lender would still have a stake in the loan being repaid.

Some analysts are convinced that if the rule is approved, home prices could decline and more people with homes underwater — the houses are worth less than the owners owe — will walk away, creating a bigger overhang of unsold properties.

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