The global body overseeing banking, securities and insurance regulation – the Financial Stability Board (FSB) – has finalized standards governing residential-mortgage origination focused on prudential concerns (not necessarily consumer protection). While postulated only as “high-level principles” to permit variation based on national market practice, the statement details tough requirements that would significantly change mortgage finance around the world, including in the United States. Much in the principles lays out how lenders are to ensure long-term ability to repay, an issue now being addressed in the U.S. under rules intended to define a “qualified mortgage” (QM) mandated in the Dodd-Frank Act.1 However, the global standards go beyond current U.S. rules in several respects, most notably by stating that regulators should hold originators responsible for the actions of all those engaged in mortgage origination on their behalf.

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