A coalition of 44 industry, consumer, community development and civil rights groups have banded together to oppose a regulatory proposal on risk retention that they claim would increase the cost of mortgage credit for average Americans and goes beyond the intent of Congress.
At a press briefing Wednesday, the Coalition for Sensible Housing Policy issued a 12-page white paper that outlines their objections to the regulatory proposal that would require 20% downpayments on "qualified residential mortgages." Only QRM loans are exempt from risk retention and other restrictions when securitized.
As an original author of the QRM provision, Senator Johnny Isakson. R-Ga., told coalition members the regulators' proposal would have a "devastating" impact on creditworthy borrowers and the housing market.
"I strongly urge regulators to rework their overly rigid downpayment requirement for QRM. If left as is, it would make recovery in the housing market almost impossible," the Georgia senator said.
Sen. Isakson and 43 other senators have signed a letter that urges the regulators to focus on underwriting standards and eliminate the downpayment restrictions.
Reps. John Campbell, R-Calif., and Brad Sherman, D-Calif., also spoke at the Wednesday briefing.
The two began circulating a "Dear Colleague" letter in early May and 280 congressmen have signed it.
The letter urges the regulators to "revise the proposed rule to reflect the intent of Congress by including prudently underwritten privately insured loans within the QRM definition."
The comment period on the proposed risk retention rule ends August 1.