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Federal Legislative and Regulatory Issues
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Mortgage Risk Retention Six federal agencies,
the Fed, HUD, FDIC, FHFA, OCC and SEC in 2011 issued a proposed rule
requiring sponsors of asset-backed securities to retain 5 percent of the
credit risk of the underlying assets. The proposal comes from a
requirement in the Dodd-Frank Act and includes descriptions of loans
that would not be subject to these requirements, including securities
collateralized by residential mortgages that are “qualified residential
mortgages” (QRMs) under a new, narrow definition determining very high
credit quality. In our comment letter to the agencies, we communicated
that the proposed 20 percent down payment and limits on a borrower’s
debt-to-income ratio could unnecessarily prevent otherwise well
underwritten loans from being approved. And, any loans being made by
Freddie Mac and Fannie Mae are not subject to the requirements at all as
long as those entities are under conservatorship or receivership, which
represents more than 90 percent of the current mortgage market. It is
likely a new proposal for QRMs will be made in 2012, with the Consumer
Financial Protection Bureau being the agency tasked with finalizing any
rule.
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GBA's professional staff represents the membership at the both the state and federal levels. Contact any of them with questions about issues:
Joe Brannen |
