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Qualified Residential Mortgage Reg Vote Expected Oct. 22
Monday, October 20, 2014 6:05 AM

Financial regulators are prepared to finalize a qualified residential mortgage (QRM) regulation Oct. 22, according to an agenda for an open board meeting posted by the Federal Reserve on Wednesday.

The Wall Street Journal reports the standards for mortgages packaged into securities and sold to investors will be loosened, with the intent of making credit more readily available.

The Dodd-Frank Act requires companies issuing mortgage-backed securities to retain part of the risk, with the intention that the risk would force closer attention to the quality of the loans. The current QRM rule includes a "broad exception for banks and other issuers of mortgage-backed securities from having to retain a portion of the credit risk on their books."

In commenting on the proposal last year, CUNA supported aligning the definition of a QRM more closely with the CFPB's definition of a qualified mortgage, even though CUNA does not support the 43% debt-to-income ratio a borrower must meet for a qualified mortgage.

"Our main concern has been that how QRM is defined could affect the mortgage market generally and the types of loans that securitizers will be willing to package," said CUNA Deputy General Counsel Mary Dunn

A National Credit Union Administration proposal would allow a credit union that meets certain requirements to securitize loans it has originated. Given the legal requirements and resources needed to securitize loans, the extent to which credit unions will securitize loans is unclear.