In the keynote address of ASF 2013, Thomas Curry, comptroller of the Office of the Comptroller of the Currency, stressed the progress that the housing market has made since hitting what many now see as a bottom during the crisis.
But with the Qualifed Residential Mortgage (QRM) still undefined, it’s clear that securitization players will have to wait some more for a more vibrant private label market to resurface.
In the eyes of much of the market, the roughly $3.5 billion in private label RMBS seen last year between Redwood Trust and Credit Suisse is a good start but is still far from a truly active marketplace.
Curry said he was encouraged by recent settlements in the mortgage sector, which has seen a fair number of lawsuits recently. These should clear the way for commercial banks to deploy their resources more productively, in the comptroller’s view.
Curry cited the recent $11 billion dollar settlement between Bank of America and Fannie Mae as an example of a settlement that could close the door on some of the more unsavory practices of players during the height of the RMBS boom, while opening the door to future RMBS.
But for private label to come back, Curry acknowledged the underlying assets have to be more stable and that QRM — among other regulations — needs to be spelled out. On the former front, Curry found grounds for optimism. Prices appear to be rising again in the hardest hit markets and delinquencies measured by the OCC are at the lowest in three years, according to the agency’s latest mortgage metrics.
Still, the contours of QRM — of vital important for the securitization of mortgages as it defines which mortgages are free from 5% risk retention — remain unclear. And just how the recent defining of the Qualified Mortgage (QM) will shape QRM’s final character, Curry didn’t say.