The debate over the definition of the qualified residential mortgage slated for use in determining regulatory risk retention standards boils down to two key questions, John Walsh, the acting Comptroller of the Currency, said in a speech at the American Securitization Forum's conference in Las Vegas.
“Should the exception be narrow—to recognize the unusual nature of a total exemption from the statute's risk retention premise? Or should it be broader—recognizing that a range of mortgage types could demonstrate acceptably low default rates? These are the types of issues under discussion among the rulemaking agencies right now,” said Walsh.
“I don't think any element of the proposal attracted as much criticism as the QRM,” he said.
Walsh also said, “Whether in mortgages, credit cards, auto finance, or student loans, meeting the needs of American consumers depends heavily on securitization. It is hard to imagine full recovery of the financial system without the liquidity and funding avenues provided by a well functioning securitization market.
“Certainly, it is hard to foresee a strong recovery for the housing industry without securitization,” he added. “And it seems unlikely we will experience strong and sustained economic growth without a rebound in the housing sector.”
