Removing Barriers Blog

CUNA joins trades and industries in sending request QRM Risk Retention Review
Posted January 31, 2020 by CUNA Advocacy

CUNA joined with a number of trade, consumer, and civil rights organizations to request that the Federal Reserve, Federal Housing Finance Agency, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Securities and Exchange Commission, and Department of Housing and Urban Development delay any conclusion from their re-evaluation of the Qualified Residential Mortgage (QRM ) definition until after the Consumer Financial Protection Bureau finalizes and implements the changes it is considering to the Qualified Mortgage (QM) definition. Each agency was required to start reviewing the regulation by December 24, 2019, in accordance with the timeline set forth in the original QRM rule.

The QRM standard applies to the quality of loans backing mortgage-backed securities (MBS), whereas the QM standard applies to a consumer’s ability to repay a mortgage. Currently, the QM and QRM definitions are identical.  This means that, if an MBS only contains loans that meet the QM ability-to-repay criteria, the securitizer does not need to retain extra capital. This result allows for significant liquidity in the MBS market, which helps keep costs low for homebuyers. Accordingly, the joint letter notes that a delay in reaching any final conclusions under the QRM review is necessary in order to preserve the possibility of alignment between the QM and QRM standards.