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MBA Outlines Support for Alternative QRM

The Mortgage Bankers Association responded on Thursday to the re-proposed Risk Retention rule submitted for comment by six regulatory agencies last summer.  In a letter to the agencies from David H. Stevens, MBA’s CEO and President, the association expressed strong support for what is called the Preferred Approach which aligns the qualified residential mortgage (QRM) definition to be issued by those agencies with that of the qualified mortgage (QM) definition promulgated by the Consumer Financial Protection Bureau (CFPB). 

The QRM rule originally proposed by the six agencies – the Office of Comptroller of the Currency, the Securities and Exchange Commission, Federal Deposit Insurance Corporation, Federal Reserve, Department of Housing and Urban Development, and Federal Housing Finance Agency – would require a borrower to make a minimum of a 20 percent down payment or have 25 percent equity for refinancing.  The borrower would also have to meet relatively low maximum debt-to-income (DTI) levels and satisfy stringent credit history requirements.  The rule also required lenders to hold a portion of the loan risk in a prescribed manner and for the life of the security.