The FinServ Subcommittee on Capital Markets held a session today to discuss Chairman Garrett’s (R-NJ) draft legislative proposal to reform the secondary mortgage market. However, the bill goes considerably farther, targeting the entire Dodd-Frank risk-retention requirement (see FSM Report ABS17) for repeal, not just the “qualified residential mortgage” (QRM) requirements (see FSM Report MORTGAGE100). For good measure, the legislative draft would bar regulators from using any other powers to mandate risk retention, rolling back the FDIC’s safe-harbor rule (see FSM Report ABS19) and blocking any further action in this area. The bill would also establish uniform mortgage servicing and underwriting requirements, giving FHFA new power as regulator over the entire RMBS arena, not just the GSEs.
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