Thernregulations require specific underwriting standards including maximum front-endrnand back-end debt-to-income rations of 28 percent and 36 percent respectively,rna loan-to-value ratio of 80 percent for purchase mortgages and 75 percent forrnrefinances and credit restrictions including an absence of 60-day delinquenciesrnfor a two year period prior to the loan. MBA said that, while these factors canrnbe accurate predictors of loan performance, they should not each be consideredrnin isolation and the rule should allow for flexibility in interpreting each ofrnthe component parts.</p

Thernexemption for loans sold to Fannie Mae and Freddie Mac will help to ensurernliquidity in the market, however MBA says it will do little to shrink therngovernment’s footprint in the housing finance system and could slow the returnrnof the private secondary mortgage market.</p

ThernAssociation also takes issue with the inclusion of mortgage servicing standardsrnin the proposed regulation saying that it should be the subject of a separaterndiscussion and rulemaking. </p

Courson said that thernassociation was pleased to see risk retention applied to all asset-backedrnsecurities including those secured by automobiles and commercial business loansrnand that each has been provided multiple options in the allocation of retainedrnrisk.  The statement specificallyrnmentions the 5 percent vertical slice applied to commercial mortgage-backrnsecurities (CMBS,) but Courson goes on to say that given the complex provisionsrnof the rule and its impact on the CMBS market the Association plans to seekrnclarification of the rule on commercial loans that will be eligible for arnreduction in the 5 percent retained risk to ensure that terminology andrneligibility requirements are consistent with industry norms and practices.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.