"We don't want to end up with any unintended consequences that prevent private capital from returning or further restrict sound lending and ultimately go counter to the reset we're trying to achieve," Bank of America (BAC - Get Report) CEO Brian Moynihan said of the mortgage rules in a speech at the Brookings Institution Friday.
Meanwhile, on the supply side, the tight inventory situation that has helped drive prices higher might not last.
In some states such as Florida, New York, New Jersey and Illinois, where a judicial foreclosure process requires banks to prove in court that the borrower is in default in order to foreclose, there is a large and growing backlog of foreclosed properties that are yet to come on to the market.
The share of mortgages in foreclosure in judicial states averages 6.6% compared to 2.4% in non-judicial states, according to the Mortgage Bankers Association.According to former Morgan Stanley analyst Oliver Chang, who now runs
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