Six regulatory agencies late Monday afternoon extended the comment period on the controversial risk retention proposal until August 1, after intense lobbying from various factions of the mortgage industry.
The six said the extended comment period will "allow interested persons more time to analyze the issues and prepare comments.” The original comment period ends June 10.
FDIC chairman Sheila Bair, who has been pushing for a strict risk retention rule as it relates to “qualified residential mortgages” is slated to leave the agency July 8, which means she will have no further role in shaping the regulation.
A 20% downpayment definition for a QRM united industry and consumer groups against the risk retention proposal.
One industry lobbyist, requesting anonymity, said he hopes incoming FDIC chairman Martin Gruenberg will be more sympathetic toward a broader QRM definition that includes well underwritten loans with 10% down supported by private mortgage insurance. Gruenberg currently serves as FDIC vice chairman.
Under risk retention legislation, only mortgages that meet the QRM definition are exempt from risk retention. On other loans, securitizers must retain up to 5% of the credit risk when issuing mortgage-backed securities.
