Enter multiple symbols separated by commas

American Dream of homeownership will die, unless…

The United States is at risk of becoming a nation of renters because of the "totally unnecessary" constraints that continue prevent lenders from giving out mortgages, former Wells Fargo chairman and CEO Richard Kovacevich told CNBC on Thursday.

Kovacevich blames two factors, starting with the Dodd-Frank financial overhaul act. "The litigation risk … says we should not make any loan that a borrower can't repay." He joked about that being a great idea, and then turned serious, saying: "I haven't figured out how to do that yet."

(Watch: This is the year 'Johnny' moves out: CFO)

The other fix needed, he said, is an easing of the standards that govern when banks must buy back faulty mortgages from government-run Fannie Mae and Freddie Mac, which own or guarantee the bulk of the U.S. home loans. That could help inspire lending.

In a "Squawk Box" interview, Kovacevich acknowledged that the new director of the Federal Housing Finance Agency, Mel Watt, is trying to do just that. But on Dodd-Frank, there's been no movement, he said.

"We have to make those two changes if you want to get this economy going because of housing," he said.

Morning Squawk:
CNBC's before the bell news roundup

Sign up to get Morning Squawk each weekday

Please enter a valid email address
To learn more about how we use your information, please read our Privacy Policy.

—By CNBC's Matthew J. Belvedere

Contact Real Estate


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.
  • Diana Olick

    Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

Home prices and supply map

  • Track the latest moves in sales, prices and inventory in some of the largest housing markets across the country.

Latest Special Reports

  • From left: Sergey Brin, Dick Costolo, Ryan Seacrest

    Code Conference, from those who produced D: All Things Digital Conference, addresses the impact of digital technology on our lives and businesses.

  • Tips on the best-performing portfolio strategies and global market trends that can help you become a smarter investor.

  • Financial Advisor

    CNBC looks at how technology, product development, succession plans and client relations impact financial advisory firms.