Tuesday, June 7, 2011

Regulators Extend QRM Comment Period

Today, regulators extended the deadline for public comment on the risk retention proposed rule (which includes the Qualified Residential Mortgage exception) until August 1 to allow interested parties more time to analyze the issues and submit comments.

At the end of March, the U.S. Department of Housing and Urban Development (HUD) along with the four bank regulators, the Security and Exchange Commission and the Federal Housing Finance Agency released this risk retention proposal, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule would require that sponsors of asset-backed securities retain at least five percent of the credit risk of the assets. The proposal also defines qualified residential mortgages (QRMs) which are loans that are exempt from the risk retention requirement. The underwriting standards for QRMs laid out in the proposal include 20% down payment, strict debt-to-income ratios, and borrower credit history restrictions. Public comments were originally due on June 10.

Many consumer and industry groups have previously expressed concern over the June 10 deadline for submitting public comments on this rule. NHC has been active in cautioning policymakers on the unintended consequences of the QRM rule and applauds the regulators’ decision to extend the deadline to allow for additional input to ensure this rule is defined properly.

Last week, NHC’s Ethan Handelman, Vice President for Policy and Advocacy, spoke at a press conference in Washington alongside representatives from the Mortgage Bankers Association, the National Community Reinvestment Coalition, the Consumer Federation of America, and the Center for Responsible Lending. Handelman and others described how the draft QRM definition could make it harder for low- and moderate-income families to afford homes due to the stiff requirements on borrowers to make a 20% down payment and a low debt-to-income ratio.

The National Association of REALTORS® and 14 other national associations also wrote a letter requesting the deadline be extended to allow the public adequate time to review the 400 page rule and comment given the impact this rule could have on the availability of mortgage credit in the future.

NHC will make comments on this rule before the new August 1 deadline as well as remain active in discussions in the coming months around the QRM rule in order to ensure safe, decent and affordable housing for all in America.

For more information, read the joint media release on the comment period extension and read more on NHC’s position on QRM here.

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