Regulators tighten subprime lending rules

"I don't think this precludes (low-doc loans in) some special circumstances as long as there is some way to look at the income the borrower has ... like a tax return," Dugan said in an interview with Reuters.

Some lenders had hoped regulators would leave space for subprime borrowers to get a new loan without meeting the stringent new underwriting standards.

However, Friday's principles seemed to close the door on those hopes as it stressed that borrowers should be qualified based on whether they can make payments over the life of the loan.

The guidance was issued by the Fed, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the National Credit Union Administration.

While the guidelines will immediately impact banks and others who lend funds from their depositors, it does not apply to firms that lend money from investors and Wall Street. In recent years, a large share of risky subprime loans came from non-banks that are regulated by the states.

On Friday, the Conference of State Bank Supervisors said that it intended to harmonize state regulations with the federal standards.