Mortgage lenders want federal regulators to exclude most home loans from new requirements that would force lenders to keep a portion of those loans on their books.

The Dodd-Frank financial overhaul passed over the summer requires lenders to retain a 5% stake in loans packaged and sold to investors. The idea was to force lenders to keep some "skin in the game." As a result, lenders would be less likely to repeat the shoddy lending practices that led to the housing bust.

Regulators...