Industry groups such as the National Association of Realtors, the National Association of Home Builders, along with consumer advocates such as various movers in Nashville, TN<, have opposed the rule–required by the Dodd-Frank legislation and intended to prevent financial institutions from writing risky mortgages and then selling them to other investors–since they were unveiled in March. 

Recently, an unlikely coalition of advocates and industry groups has formed, calling itself the Coalition for Sensible Housing Policy and issuing a white paper criticizing the proposed restrictions. They've managed to enlist a majority of House members and 44 Senators in their cause.

Many of the trade associations in the coalition are from the real estate, mortgage banking and home building industries, all of which have been big campaign contributors to many of the members of Congress leading the charge for slighter regulation.

The rule stems from a provision in last year’s Dodd-Frank Wall Street overhaul bill, and requires that mortgage sellers keep five percent of the loan’s value on their books unless it meets standards for soundness–called a qualified residential mortgage, or QRM. The Federal Deposit Insurance Corporation, which regulates commercial banks, was left to define QRMs, and determined that only loans in which borrowers put down 20 percent down payments would qualify.

Three senators—Sens. Johnny Isakson, R-Ga., Mary Landrieu, D-La., and Kay Hagan, D-N.C.—authored the section of the law that exempted QRMs, but left it to the FDIC to define them. The new rules make qualifying for that exception far too difficult, the three senators, along with two House members, have said. 

In his career, Isakson, a former real estate executive, has received more campaign contributions from that sector than all but four sitting senators: over $2.3 million from political action committees and real estate employees, according to the Center for Responsive Politics. His campaign has raked in more from home builders—over $250,000—than all but one Senate colleague.  One of the coalition groups is the National Association of Home Builders.

Landrieu, meanwhile, tapped the real estate sector for nearly $450,000 in the past six-year period, more than she got from every other industry except lawyers and law firms, according to the CRP. Hagan has relied less on the sector.

The two House members leading the charge, Reps. Brad Sherman D-Calif., and John Campbell, R-Calif., both on the Financial Services Committee, each received about $120,000 from the real estate industry for their 2010 re-election race, more than double the average received from that sector by their colleagues, according to the CRP.

One corner of the real estate industry—mortgage bankers and brokers—is the key constituency lobbying against the rule. Mortgage industry PACs and employees have contributed more to Sherman—about $140,000—in his career than to all but five of his House colleagues, according to the Center for Responsive Politics.

Further, two of his former staffers are now lobbying for the Mortgage Bankers Association, which has opposed the new rules since they were released but has not joined the coalition. The MBA had the fourth biggest lobbying budget in the real estate industry last year.

The MBA’s legislative affairs director Brad Cheney was the California’s congressman’s chief of staff from 2008 to 2009. Gary L. Goldberg, Sherman’s one-time legislative director, lobbies for the industry group on Dodd-Frank implementation. Goldberg also lobbies for two other coalition members on the same issue: the Independent Community Bankers of America and the National Association of Home Builders.

The coalition’s lobbying and advocacy push has brought more and more members of Congress to its side. At the end of May, there were about 200 members of Congress who signed on to letters opposing the new risk retention rules. That number has climbed to over 320. After the late May letters, regulators pushed back the comment period for the new rules to August. On Friday the Treasury Department signaled regulators are willing to dial back the restrictions.