Regulators Looking at Aligning QRM and QM Rules

Six regulatory agencies are working on the qualified residential mortgage rule and they are looking at aligning the QRM risk retention rule with the qualified mortgage rule, according to a key participant.

“This alignment between QM and QRM we believe is a very important piece of what we need to consider in finalizing that standard,” HUD secretary Shaun Donovan said Thursday.

The Consumer Financial Protection Bureau issued the final QM rule in January. The QM rule is designed to ensure that consumers get safe mortgages that they can afford to repay.

The CFPB’s rulemaking makes room for most loans being originated today, including Fannie Mae, Freddie Mae and Federal Housing Administration, to qualify as QM loans.

Under the Dodd-Frank Act, non-QM loans will be subject to risk retention where the securitizer must retain 5% of the credit risk.

If the six regulators decide QRM loans must have high downpayments, it would mainly hurt private lenders that originate non-government-backed loans.

“We will move forward as quickly as possible to establish the right standard,” Donovan told the Mortgage Bankers Association at their annual Washington conference.

Other regulators involved in the QRM rulemaking have also signaled that they are looking at aligning the QRM and QM rules. Consumer and industry groups support bringing the QRM rule in “sync” with the QM rule.