U.S. Department of Housing and Urban Development (HUD) secretary Shaun Donovan Tuesday reiterated his call for regulators to finalize a qualified residential mortgage (QRM) rule that does not restrict access to “safe” loans that are being originated today.
The HUD secretary stressed that the QRM rule mandated under the Dodd-Frank Act should be drafted to require risk retention only on irresponsible loans originated during the housing boom.
“Less than 15% of the loans originated in 2006 would qualify under the even broader definitions that are being considered for QRM,” he said Tuesday morning.
However, some regulators want a narrower definition.
“We need to remember that the goal of this debate” is not to place further limits on today’s tight credit standards “but, rather to ensure that access [to credit] we are encouraging doesn’t cause another crisis,” he said at a housing forum sponsored by the American Action Forum and Progressive Policy Institute.
The QRM rule will determine which single-family loans are exempt from risk retention. Securitizers must retain 5% of the credit risk on loans that are not exempt. (The Dodd-Frank Act exempted Fannie Mae, Freddie Mac and Federal Housing Administration loans from risk retention.)
Six regulatory agencies, including HUD, have been working on the QRM rule for over a year. The secretary’s comments indicate that regulators are still deadlocked on whether the definition of a QRM should be narrow or broad.
