NAR Submits Letter to Congress on QRM
On Feb. 26, 2014, NAR sent a letter to the House Financial Services Committee's Subcommittee on Capital Markets and Government Sponsored Enterprises for a hearing on the Dodd-Frank Act’s impact on asset-backed securities.
Section 941 of the Dodd-Frank Act adds a new section 15G to the Securities Exchange Act of 1934 that requires securitizers to retain 5% of the credit risk of a residential mortgage asset that it sells to a third party. Section 15G(e)(4) requires the regulators to define and exempt a Qualified Residential Mortgage (QRM). In the letter, NAR President Steve Brown asked lawmakers to urge regulators to synchronize the definiton of the QRM with the recently implemented Qualified Mortgage (QM) rule.
In synchronizing both definitions, the revised rule encourages safe and financially prudent mortgage financing while also ensuring creditworthy homebuyers have access to safe mortgage financing with lower risk of default. In addition, consistency between both standards reduces regulatory burden and gives mortgage professionals much-needed clarity and consistency in the application of the important mortgage standards required pursuant to Dodd-Frank.