If the QRM risk retention rule is not similar to the QM ability-to-repay rule, according to Corker, most lenders will only make Fannie Mae, Freddie Mac and Federal Housing Administration loans, which could stall efforts to revive private lending.
The Consumer Financial Protection Bureau recently issued the final QM rule, which provides a temporary legal safe harbor for loans that receive approval from GSE and FHA automated underwriting systems. Six other regulators are working on the QRM rule which will subject non-QM loans to risk retention. Securitizers of non-QM loans must retain 5% of the credit risk.
“As such, I strongly encourage you to consider drafting a QRM rule that syncs up with the recently determined QM rule. Matching CFPB’s version of a safe loan for any borrower with your definition of what constitutes a loan that is safe for securitization makes sense for our system, and it would be wholly consistent with the statute,” the Senate Banking Committee member says in a letter to the six regulators.
If the QRM rule doesn’t match up with QM rule, “we might permanently enshrine the GSEs and other government agencies as the only large-scale source of mortgage credit in our country,” Corker writes in the Jan. 22 letter. “Such an outcome would not be healthy for our financial system,” he added.