A big issue in the rush to set mortgage standards has been the idea of so-called qualified mortgages. As regulators pondered some steps that would protect the financial system and make a repeat of the mortgage meltdown less likely, one concern was that not all of these protective new rules ought to apply to safe mortgages.

Regarding mortgage backed securities, for example, the new rules called for MBS issuers to keep 5 percent stakes in the packaged security, to keep some skin in the game. But that would ultimately raise costs and interest rates, perhaps by more than a few percentage points. So regulators suggested that "qualified mortgages" would be exempt.

Some new rules that came out this week also impose some burdens on lenders, such as the obligation to make sure the borrower could repay the loan and heightened legal liability. Again, if loans are qualified, the new  loans would not apply.

So the big issue is what constitutes a qualified loan.

The Fed has just put forth two options, Reuters notes. Under one scenario, the loan could not include interest-only payments, a balloon payment, reverse amortization. Under the other scenario, the loan would have to meet additional requirements, such as having the lender having to verify a borrower's employment status, debt obligations, income and debt levels. There would be some exceptions in rural areas, for example.

The proposals are now out for public comment.

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