"The CFPB's Qualified Mortgage rule was informed by extensive interagency consultation with the other financial regulators, and the bureau has responded to requests for information from the regulators responsible for the proposed QRM rule during that rulemaking process," the spokesman said in an email. In a statement, a CFPB spokesman said the banking agencies and the consumer agency have worked together throughout the process of defining both QM and QRM. "The agencies are proposing to broaden and simplify the scope of the QRM exemption from the original proposal and define 'qualified residential mortgage' to mean 'qualified mortgage' as defined" in law "and implementing regulations, as may be amended from time to time," the proposal said. The regulators' QRM proposal added that any change made by the CFPB to QM would automatically apply to QRM as well. (The original QRM proposal had a more rigorous 36% maximum DTI limit.) The consumer agency created several criteria for QM, including a ban on interest-only and other nontraditional loans, a limit on points and fees of 3% of the total loan amount, and a maximum 43% debt-to-income ratio. The latter definition was established under a final rule issued by the CFPB in January. When regulators re-proposed QRM in August, they abandoned specific down payment requirements and instead said that QRM should equal QM. Their original proposal in 2011 drew sharp protests from both bankers and consumer groups for including a minimum 20% down payment requirement to meet the standard. But the six agencies' efforts to define QRM have been challenging. There is broad agreement that QRM should not stray too far from QM in order to prevent a compliance nightmare, and Dodd-Frank specifies that QRM cannot be broader than QM. (The six agencies involved are the Federal Deposit Insurance Corp., Federal Housing Finance Agency, Federal Reserve Board, Office of the Comptroller of the Currency, Department of Housing and Urban Development and Securities and Exchange Commission.) That means a regulator that is focused primarily on a borrower's ability to repay under QM will likely not be tailoring the rule to address the capital markets intent of QRM."ĭodd-Frank required the six agencies to mandate that lenders retain at least 5% of the loans they securitize, but also crafted an exception for QRM loans that would not be subject to risk retention. "If the CFPB wants to change QM, that would automatically flow through and change QRM. "It goes from one extreme of having too many cooks in the kitchen to the other extreme of having a single decision-maker in the kitchen," said Tom Deutsch, the executive director of the American Securitization Forum.
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