Housing and mortgage trade groups are concerned that federal regulators will propose a narrow exemption to MBS risk retention rules that would impose high capital requirements on plain vanilla mortgages, making them unnecessarily expensive for creditworthy borrowers.

The Dodd-Frank Act requires securitizers of residential mortgages to retain 5% of the credit risk on MBS but the legislation carves out an exemption for qualified residential mortgages (QRM). 

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