In a letter sent to the heads of six
federal regulator agencies, a consortium of 49 housing industry participants asked
that they align the Qualified Residential Mortgage (QRM) regulation they are
promulgating with the Qualified Mortgage (QM) rule already released by the
Consumer Financial Protection Bureau (CFPB).
The Coalition for Sensible Housing Policy said it sent the request on
behalf of "diverse stakeholders
united in their commitment to responsible lending
and the recovery of
The QM, which was
issued by CFPB on January 10, sets the standard for fully documented and
soundly underwritten mortgage products.
The QRM will define exceptions to the Dodd-Frank requirement that loan
originators retain a portion of the loan risk when they sell loans to
investors. The letter says, "The riskier features and products
the heart of the recent financial crisis are not eligible for
treatment, and they likewise should not be eligible for the QRM. Aligning
QRM and QM standards
will encourage safe and
financially prudent mortgage lending,
while also creating more opportunities for private capital to reestablish itself
as part of a robust and competitive mortgage market."
Specifically, the Coalition opposes the addition of stringent down payment and other
restrictive requirements to the QRM definition which they say will ultimately limit the ability
of private capital to reach lower
households and first-time buyers. The QRM, they maintain, should not be more restrictive than QM.
states that the QM definition provides strong underwriting,
documentation and product standards that demonstrably lower the risk of
defaults consistent with the statutory requirements for the QRM. Synchronizing
the QRM definition with the QM would ensure that strong
incentives for safe and sound lending
are in place, while not impairing
the return of
all segments of the
mortgage finance market. Also, they say the QM features
entirely consistent with the investor protection goals of
Section 941 of the Dodd-Frank Act, which limits the QRM exemption from risk retention to loans with "product features that historical
loan performance data
indicate result in a lower risk of default."
The letter was sent to the heads of the
Office of Comptroller of the Currency, the Federal Deposit Insurance
Corporation, Department of Housing and Urban Affairs, The Federal Reserve, the Securities
and Exchange Commission, and the CFPB.
The Coalition's membership is composed
of national and state associations representing banking, real estate, title,
building, consumer, and other interest groups.