Newsroom

A long-awaited, less-stringent interagency proposal defining qualified residential mortgages under the Dodd-Frank Act is slated for action during an Oct. 22 open meeting of the Federal Reserve Board.

The proposed rule, issued jointly by the Fed, CFPB and other federal banking and housing finance regulators, would not apply to credit unions directly, but credit unions – as participants in the mortgage market – will feel the market impact of any final rule. The other agencies will also need to act on the final rule before it takes effect.

The revised QRM standard is more relaxed than the initial rule introduced in April of 2011, which required lenders to retain 5 percent of the loans when they are securitized or a 20 percent down payment from borrowers.

NAFCU opposed the risk retention requirements, as they would make participation in the securities market more difficult for credit unions. Regulators later issued a revised proposal.

The Wall Street Journal reported Wednesday on the proposed rule.

NAFCU, with 48 other groups in the Coalition for Sensible Housing Policy, wrote regulators in March 2013 urging them to synchronize the QRM definition with CFPB's QM standard. The QM standard defines factors lenders must consider when determining whether the borrower has the ability to repay the loan. NAFCU submitted its own comment letter last October to the Federal Finance Housing Agency on the revised proposal.