Yesterday, regulators voted to lengthen the comment period on the proposed risk retention requirement from June 10th to August 1st. This will provide crucial time for many institutions to formulate and organize comments to be taken into consideration by the regulators.
Despite the offered extension, the Asset Securitization Forum (ASF) announced that they still intend to submit their 150-page comment letter by the original deadline of June 10th. The ASF said it wants regulators to consider industry concerns and instead of an extension, regulators should either revise the proposed rule or develop new ones.
If enacted, the current proposal would require financial institutions to hold 5% of the credit risk on a pool of mortgages. It would also provide an exemption to the rule in the form of qualified residential mortgages (QRM), which would be available to low-default-rate mortgages with a tight debt-to-income ratio and at least a 20% down payment on the loan.
In an ASF press release issued yesterday, Executive Director of the ASF, Tom Deutsch continued to strongly urge the regulatory agencies to rethink these proposed QRM requirements for the sake of bigger picture.
“These are extremely complex and broad-ranging issues—we simply have to get them right, for failure to do so will damage a wide range of credit markets and significantly impair the ability of the American housing market and broader economy to recover over time,” said Deutsch.
The ASF has recently testified on this same issue at both the Senate Banking Committee’s Sub-committee on Securities, Insurance & Investment and the House Committee on Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises.
They plan to continue providing additional comments on these important issues throughout the commentary period and discussions.