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August 28, 2013
QRM rules proposed a second time
Aug. 29, 2013 – After requests from NAFCU, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Federal Reserve Board, the Department of Housing and Development, the Securities and Exchange Commission, and the Office of the Comptroller of the Currency, met on Wednesday to issue a second interagency proposal defining "qualified residential mortgages," in which the agencies make that definition consistent with that of the CFPB's for "qualified mortgages" – a change NAFCU has specifically requested.
In particular, in addition to the features of the CFPB's definition of "qualified mortgage," including the exclusion of features such as balloon payments and loan terms exceeding 30 years, the QRM proposal also requires securitizers to keep a stake in mortgages with less than 30 percent down payment. Like "qualified mortgages," a QRM may not have a debt-to-income ratio exceeding 43 percent. However, unlike the CFPB's rule, a GSE-eligible loan would not be a QRM.
NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt responded: "NAFCU appreciates the agencies' adherence to our call to align the definition of ‘qualified residential mortgages' with the CFPB's definition of ‘qualified mortgages.' While the second proposal is an improvement to the first, we believe it will still have a negative downstream effect on credit unions. As such, we will thoroughly study the proposal and work with the FHFA and the other agencies to provide relief for credit unions from the rule's effect on their mortgage lending."
The proposed rule does not apply to credit unions directly; however – as participants in the mortgage market – credit unions will feel the effect of any final rule impacting that market. Although NAFCU welcomes the proposal's improvements on the previous version, the association still has concerns any new risk retention requirements as they would make participation in the securities market more difficult for credit unions.
The proposed rule was posted on the FDIC website. Comments are due Oct. 30.
In particular, in addition to the features of the CFPB's definition of "qualified mortgage," including the exclusion of features such as balloon payments and loan terms exceeding 30 years, the QRM proposal also requires securitizers to keep a stake in mortgages with less than 30 percent down payment. Like "qualified mortgages," a QRM may not have a debt-to-income ratio exceeding 43 percent. However, unlike the CFPB's rule, a GSE-eligible loan would not be a QRM.
NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt responded: "NAFCU appreciates the agencies' adherence to our call to align the definition of ‘qualified residential mortgages' with the CFPB's definition of ‘qualified mortgages.' While the second proposal is an improvement to the first, we believe it will still have a negative downstream effect on credit unions. As such, we will thoroughly study the proposal and work with the FHFA and the other agencies to provide relief for credit unions from the rule's effect on their mortgage lending."
The proposed rule does not apply to credit unions directly; however – as participants in the mortgage market – credit unions will feel the effect of any final rule impacting that market. Although NAFCU welcomes the proposal's improvements on the previous version, the association still has concerns any new risk retention requirements as they would make participation in the securities market more difficult for credit unions.
The proposed rule was posted on the FDIC website. Comments are due Oct. 30.
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