In the latest installment of the Dodd-Frank saga, bank regulators are proposing that lenders would have to offer mortgages with at least a 20 percent down payment if they want to repackage the loan to sell to other investors without keeping some of the risk on their books.

The proposed risk retention regulation would require lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is a qualified residential mortgage (QRM). Its purpose, according to bank regulators, is to create strong incentives for responsible lending and borrowing.

The FDIC and the Federal Reserve are seeking public comment on this proposal, and in the day since it was announced, they sure have received it. The Mortgage Bankers Association (MBA), the National Association of Home Builders (NAHB) and the National Association of Realtors (NAR) have voiced their dislike of the proposal.

NAR stated that this proposal will “unnecessarily burden homebuyers and significantly impede the economic and housing recovery.”

The NAHB said that “requiring a high down payment would disproportionately harm first-time homebuyers, who have limited wealth and on average account for 40 percent of homebuying activity.”

The MBA wasn’t quite so strong with their wording. “At first glance, while this rule may prove workable for commercial real estate financing, we have profound concerns about its implications for residential mortgage financing and the nation’s economy today and for generations to come,” the association stated.

What do you think? Is this proposal a bank regulator’s pipe dream or is it something that will actually help, rather than harm, the nation’s homebuyers and economy?

Could it possibly be true that in 2010 more people shelled out for vacation homes than they did for a primary residence? The answer appears to be yes according to a recent survey from HomeAway Inc., a Texas-based vacation rental online marketplace.

Vacation home sales beat out both primary residences and investment properties last year, with more than 500,000 sold. Vacation homebuyers are jumping into the market because of low real estate prices, attractive mortgage rates and the potential for price appreciation, according to HomeAway. The median sales prices for vacation properties dropped 11.2 percent to $150,000 in 2010 from $169,000 in 2009.

Nearly three-quarters (70 percent) of these consumers also said their purchase was influenced by rental income, with 94 percent planning on renting out the property over the next year. They’re hoping the rental income will cover at least half of their mortgage. I hope for their sake that’s the case too.

The state of this country’s housing finance system is in a precarious position, to say to least, and in effort to help influence the way it recovers, the Mortgage Bankers Association (MBA) – along with numerous other organizations – have set forth their own principles on how it should be done.

Here is what the national organization is calling for:

• A stable housing sector is essential for a robust economic recovery and long-term prosperity. Housing, whether through homeownership or rental, promotes social and economic benefits that warrant it being a national policy priority.

• Private capital must be the dominant source of mortgage credit, and it must also bear the primary risk in any future housing finance system.

• Some continuing and predictable government role is necessary to promote investor confidence and ensure liquidity and stability for homeownership and rental housing.

• Changes to the mortgage finance system must be done carefully and over a reasonable transition period to ensure that a reliable mortgage finance system is in place to function effectively in the years ahead.

What do you think? Should the federal government play a smaller role in housing financing? There’s been talk for a while of simply getting rid of Fannie Mae and Freddie Mac. Would something that drastic cure our housing woes?

But the MBA isn’t saying it wants to get rid of the government’s role entirely. The association states it believes a clearly defined role for the government is essential to preserving financial stability, with support through various insurance and guarantee mechanisms in order to facilitate long-term fixed-rate mortgages, affordable financing for low- and moderate-income borrowers and financing for rental housing in all parts of the country.

Bringing in more private investors does have its risks. The MBA said in order for private investors’ roles to work, it’s important that they understand the risks and rules involved. “It will be important to provide clarity and certainty to the marketplace in a manner that promotes recovery and growth,” the MBA said in a statement.

The other organizations involved in the housing finance principles include: American Bankers Association, American Financial Services Association, Community Mortgage Banking Project, CRE Finance Council, Housing Policy Council of the Financial Services Roundtable, Independent Community Bankers of America, Manufactured Housing Institute, Mortgage Insurance Cos. of America, National Apartment Association, National Association of Home Builders, National Association of Realtors, National Council of State Housing Agencies, National Multi Housing Council, Real Estate Roundtable, and the Securities Industry and Financial Markets Association.

When it comes to the American Dream, what is it that you think of? Is it the promise of prosperity and success? Thanks in part to the Declaration of Independence, which guarantees life, liberty and the pursuit of happiness, Americans have a wide view of what exactly this dream can encompass.

For many, that dream still includes becoming a homeowner, according to a recent poll from Allstate and the National Journal Group, even though this country is still trying desperately to recover from a collapsed economy and a real estate market that can’t keep its head above water.

The poll found that nearly nine out of 10 homeowners would buy their homes again. That’s saying a lot, considering prices have plummeted and home financing has increasingly become more difficult to secure. Nearly three-quarters would tell a family member or friend to buy a home as a long-term asset.

These numbers are a little hard to believe when only 35 percent of poll respondents said they thought their personal financial situations would improve over the next year. Were the other 65 percent not affected at all by the collapse of this country’s financial market, or have they not learned anything from the events that have occurred over the last few years?

Ronald Brownstein, editorial director of the National Journal Group said that “homeownership retains a powerful, almost tidal, grip on the American imagination. Even the economic experiences of the last several years don’t seem to have dimmed the yearning for ownership.”

Don’t get me wrong. I want people to buy homes and for the housing market to recover. But I don’t want more people buying homes that can’t afford them or are still in precarious financial situations.

Real estate experts are saying that Generation X –young families and adults ages 31 to 45 – are going to lead the homebuying recovery as it gets underway.

Gen X represents nearly one-third of the population that are of homebuying age (at least 30 years old), according to the National Association of Home Builders (NAHB). And while this segment of the population doesn’t represent the largest cohort, they are the “most mobile,” Mollie Carmichael, principal of John Burns Real Estate Consulting in Irvine, Calif. said at an educational webinar.

Gen Xers are beginning to think it’s a good time to get off the fence about whether to buy a home. This younger segment of the population is also going to have strong opinions about the design features their new homes will include, according to the NAHB.

Who does represent the largest potential homebuying segment of the population? Baby boomers. However, Carmichael said they’re more likely to continue to wait for the market to improve before investing in a home. Their decisions to delay retirement – in large part a result of the financial meltdown – are also playing a key factor in their decisions to downsize into smaller homes.

In stark contrast, Gen X reports wanting bigger homes than they have now.

“These are first-time buyers or younger families looking for more room to grow,” Carmichael said.

Community amenities are important to Gen X buyers, with nearly half preferring a home in a large-lot, suburban development, versus the 21 percent looking for a traditional or “walkable” neighborhood.

I know there are plenty of things most Americans aren’t all that knowledgeable about. European geography, the Bill of Rights and where President Barack Obama was born comes to mind.

However, something that American homeowners surprisingly lack knowledge of is their homeowners insurance coverage. It turns out that nearly half of homeowners believe the limits of their insurance coverage are linked to the market value of their home, according to a survey from the Insurance Information Institute (I.I.I.).

The fact is that a home’s market value has absolutely nothing to do with the amount of insurance one needs in order to financially protect their home, said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. She emphatically states that the last thing a homeowner should ever do is reduce their insurance coverage because the value of their home has decreased. This could result in, as she puts it, a home being “dangerously underinsured.”

There are also homeowners who are just trying to cut costs. Instead of reducing the amount of coverage purchased, the smarter thing to do would be to take a higher deductible, according to the I.I.I. This can substantially reduce insurance costs for those whose budgets have been a little tighter recently.

Here’s what the I.I.I. says are the three biggest insurance mistakes a homeowner can make:

1. Insuring a home for its real estate value rather than for the cost of rebuilding.

2. Selecting an insurance company by price alone.

3. Dropping flood insurance.

Whether you’re buying a home, selling or insuring one, be sure to spread the good insurance word and don’t let people you know find themselves in a sticky insurance situation.