MBA Asks Regulators to Reissue QRM Rule and Start New Comment Period

Article excerpt

On Aug. 1, the Mortgage Bankers Association (MHA) sent a 39-page comment letter to the six federal regulators who proposed a credit risk-retention rule under the Dodd-Frank Wall Street Relorm and Consumer Pro tection Act. The letter petitioned the regulators to essentially stari over on their proposed definition of a Qualified Residential Mortgage (QRM).

The letter stated, "MBA believes the proposed regulations and structure ol the QRM deviate significantly from what Congress intended and are likely to have a dramatic impact on the housing finance system unless they are substantially revised."

Getting more to the point, MBA said, "|W|e believe the wholesale changes needed to rework the proposal meri t the i ssuance 0 I a revised proposal along with anolh er round of comments prior to finalizing the rule in order to finetune and make further adjust ments as appropriate."

Another separate MBA com ment letter covered the rule's impact on the commercial/multifamily securitization market, but the 39-page letter fot used solely on securitized home loans.

MBA noted at the stari oi ils let ter that there appeared to be a schism among those interpreting the intent ol the original riskretention provision in the DoddFrank law. MBA noted some believe that Congress intended the QRM-eligible loans would be comprised of "a small subset of pristine loans" that would benefit from a risk retention exemption, while the vast majority of home loans would be subject to risk retention. MBA argued that it believed con gressional intent was contrary to that interpretation.

"Others, including MBA, believe that Congress intended to clearly demarcate and set apart riskier loans, and require risk retention on that subset. This framework envi sions capturing within the QRM definition the products and practices that lower default risk, such as those that have re-emerged since the collapse of the housing finance market," MBA wrote.

MBA offered a list ol its principal concerns regarding the pro posed QRM rule as it relates to res identical mortgages. …