of the senators who helped frame parts of the Dodd-Frank Wall Street
Reform and Consumer Protection Act in 2010 have again written to financial
regulators asking them to respect the intent of the legislation. Kay Hagan (D-NC), Johnny Isakson (R-GA) and
Mary Landrieu (D-GA) sent a letter on Thursday to the heads of the six agencies
which are formulating the qualified residential mortgage rule (QRM) of
Dodd-Frank. QRM will define exemptions
for lenders from risk retention requirements for securitized mortgages and will
define underwriting guidelines for the most affordable mortgage products.
The letter points out that the
Consumer Financial Protection Bureau (CFPB) finalized a final rule defining "Qualified
Mortgages on January 10 and asking the heads of the Federal Reserve, Federal
Deposit Insurance Corporation, Securities and Exchange Commission, Office of
Comptroller of the Currency, Federal Housing Finance Agency, and Housing and
Urban Development to finalize the definition of QRM "consistent with the
mandate that QRM be no broader than the definition of a QM." The letter is
very similar to one the three senators sent to the same agencies in June 2011. That letter was cosigned by 33 Republican and
Democratic members of the Senate.
said that Dodd-Frank's QRM exemption resulted from the Senate's bipartisan effort to ensure that responsible borrowers have ongoing
access 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 scheduled
amortization and, in the case of low down payment loans,
insurance, to the extent such insurance reduces the risk of default."
The Senators said the QRM rule published
over a year ago proposed an overly rigid, narrow standard that could deny many responsible borrowers the opportunity
of homeownership. "As sponsors of the QRM exemption from risk retention in Dodd-Frank Act, we intentionally omitted a specific down payment
requirement and never contemplated the rigid 20% or 10% as discussed in the March 2011 Notice of Proposed
Rulemaking. We respectfully urge you to act
quickly to revise the rule to accurately reflect the language- and intent - of Dodd Frank."