Fifteen industry and consumer groups are urging federal regulators to extend the June 10 comment period on the contentious risk retention proposal, which they said will have an “enormous impact on the availability and cost” of obtaining a mortgage.
The 400-page proposal includes almost 200 questions and requires data development and analysis, the 15 groups said in a comment letter filed late last week with the six regulatory chiefs working on the risk retention rule.
“For this and other reasons, we respectfully but strongly request” an extension of the comment period until July 22, they argued.
The proposed rule requires securitizers to retain 5% of the credit risk on a pool of mortgages. Only “qualified residential mortgages” (QRMs) with a minimum downpayment of 20% would be exempt from risk retention.
The signers of the May 13 letter, which include the American Bankers Association and Center of Responsible Lending, contend the QRM exemption is “narrowly designed” and would require significantly higher downpayments than required today.
Citing the importance of the issue, the signers want regulators to hold a series of regional hearings to solicit more public input. (The Federal Reserve Board, and Department of Housing and Urban Development have held public hearings during important rulemakings.)
“We believe such an approach is clearly warranted here as well,” the trade groups said.