Republican presidential candidate Mitt Romney sharply questioned President Barrack Obama’s regulatory policies during the debate Wednesday evening, including the incumbent's failure to finalize a “qualified mortgage” (QM) rule, which has stifled the housing market.

Under the law, the Consumer Financial Protection Bureau (CFPB) must require lenders to ensure a borrower has the ability to repay a loan unless it is a QM. But the agency has repeatedly delayed issuing a final rule – something Romney seized on in his remarks.

The QM definition will critically impact the joint risk retention rulemaking of six other regulatory agencies since the “qualified residential mortgage” (QRM) definition of risk retention cannot be broader than the CFPB's QM definition, according to the American Securitization Forum. Securitized deals backed by QRMs will be exempt from the 5% risk retention requirement.

“You say we were giving mortgages to people who weren’t qualified. That’s exactly right. That’s one of the reasons for the great financial calamity that we had. And so Dodd-Frank correctly says we need to have qualified mortgages and if you’re given a mortgage that are not qualified there are big penalties,” Romney said.

“Except they didn’t go on to define what a qualified mortgage was. It’s been two years, we don’t know what a qualified mortgage is yet. So banks are reluctant to make loans, mortgages. Try getting a mortgage these days,” he added. “It’s hurt the housing market because Dodd-Frank didn’t anticipate putting in place the kinds of regulations you have to have. It’s not that Dodd-Frank was always wrong with too much regulation, sometimes they didn’t come out with clear regulations.”


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