A coalition of industry, consumer and civil rights groups is urging federal regulators working on a risk-retention securitizing rule to stay within the boundaries of the recently finalized qualified mortgage rule.
The QM rule “sets the standards for fully documented and soundly underwritten mortgages,” according to the Coalition for Sensible Housing Policy, and the QM features are consistent with MBS investor protection goals of the risk-retention rule formerly known as the qualified mortgage rule.
“QRM should not be more restrictive than QM,” according to a March 4 letter signed by the 49 coalition members.
The Dodd-Frank Act requires issuers of private-label securities to retain up to 5% of the credit risk on mortgages that don’t meet the QRM requirements.
And the coalition doesn’t want the
The “coalition strongly opposes the addition of stringent downpayment and other restriction requirements to the QRM rule” that would undermine a revival of the private-label securities market.
“Synchronizing the QRM definition with the QM standards would ensure that strong incentives for safe and sound lending are in place, while not impairing the return of private capital to all segments of the mortgage finance market,” the joint letter says.
The QRM requirements only apply to PLS securities. Congress provided a QRM exemption for Fannie Mae, Freddie Mac and Ginnie Mae MBS.
The six regulatory agencies working on the QRM rule issued a proposal back in March 2011 that required a minimum 20% downpayment to be exempt from risk retention.
The measure ran into a buzz saw of criticism from Congress and industry groups.
A few weeks ago, key regulators indicated that they are looking at making the QRM rule “congruent” with the QM rule.
Some observers are looking for the regulators to issue the final QRM in the second quarter.
