Federal regulators should allow three-year ARMs and certain interest-only loans to be classified as "qualified mortgages" that will be exempt from risk retention rules, according to the Mortgage Bankers Association (MBA).

Congress created the qualified mortgage exemption in the Dodd-Frank Act to facilitate the securitization of safe and well-underwritten single-family loans while penalizing those involved in the securitization of high- risk subprime and payment option ARMs.  

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