Senators Push for QRM Matching Dodd-Frank Intent

by devteam February 15th, 2013 | Share

Threernof the senators who helped frame parts of the Dodd-Frank Wall StreetrnReform and Consumer Protection Act in 2010 have again written to financialrnregulators asking them to respect the intent of the legislation.  Kay Hagan (D-NC), Johnny Isakson (R-GA) andrnMary Landrieu (D-GA) sent a letter on Thursday to the heads of the six agenciesrnwhich are formulating the qualified residential mortgage rule (QRM) ofrnDodd-Frank.  QRM will define exemptionsrnfor lenders from risk retention requirements for securitized mortgages and willrndefine underwriting guidelines for the most affordable mortgage products.    </p

The letter points out that thernConsumer Financial Protection Bureau (CFPB) finalized a final rule defining “QualifiedrnMortgages on January 10 and asking the heads of the Federal Reserve, FederalrnDeposit Insurance Corporation, Securities and Exchange Commission, Office ofrnComptroller of the Currency, Federal Housing Finance Agency, and Housing andrnUrban Development to finalize the definition of QRM “consistent with thernmandate that QRM be no broader than the definition of a QM.”  The letter isrnvery similar to one the three senators sent to the same agencies in June 2011.  That letter was cosigned by 33 Republican andrnDemocratic members of the Senate. </p

Thursday’s letterrnsaid that Dodd-Frank’s QRM exemption resulted from the Senate’s bipartisan effort to ensure that responsible borrowers have ongoingrnaccess to prudent, sustainable mortgages.  “Our intent as the drafters of this provision was, and remains, clear: to incent the origination of well underwritten mortgages with traditional terms, including full documentation, full scheduledrnamortization and, in the case of low down payment loans,rnprivate mortgagerninsurance, to the extent such insurance reduces the risk of default.”</p

The Senators said the QRM rule publishedrnover a year ago proposed an overly rigid, narrow standard that could deny many responsible borrowers the opportunityrnof homeownership.   “As sponsors of the QRM exemption from risk retention in Dodd-Frank Act, we intentionally omitted a specific down paymentrnrequirement and never contemplated the rigid 20% or 10% as discussed in the March 2011 Notice of ProposedrnRulemaking.  We respectfully urge you to actrnquickly to revise the rule to accurately reflect the language- and intent – of Dodd Frank.”

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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