The mortgage industry breathed a collective sigh of relief when regulators unveiled a rule reproposal that would align the qualified residential mortgage (QRM) definition — a key element of Dodd-Frank’s risk retention framework — with the qualified mortgage (QM) provisions set forth under the Consumer Financial Protection Bureau’s (CFPB) ability-to-repay rule. However, industry participants hoping for workable final rules should familiarize themselves with the proposal and submit comments to regulators, said Kristie Kully, of counsel in the Washington, D.C., office of K&L Gates.
Public comments on the new proposal are due by Oct. 30.
Six regulatory agencies are working to implement provisions of the Dodd-Frank Act that require securitizers to retain at least 5 percent of the credit risk of the assets collateralizing asset-backed securities. The act also requires regulators to establish criteria for QRMs — certain mortgages that will be exempt from the risk-retention requirements.
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