The FinServ Capital Markets Subcommittee today focused on the agencies’ proposal to implement the risk-retention requirements in Dodd-Frank (see FSM Report ABS22), focusing in large part on the contentious provisions to exempt “qualified residential mortgages” (QRMs) from what the agencies believe will be costly risk-retention requirements.  At the same time, however, regulators argued that the very stringent criteria for QRM eligibility will not doom non-QRM securitization once rules take effect to define “qualified mortgages” as required elsewhere in the Dodd-Frank Act (see FSM Report MORTGAGE94).   Republicans generally opposed the rule as a whole and the exclusion of private mortgage insurance from the QRM, reiterating also strong objections to including servicing and the proposed exemption for the GSEs.  Democrats, in contrast, expressed concern about the QRM’s high-downpayment and borrower-eligibility requirements.  In addition to their specific comments on the NPR, regulators emphasized repeatedly that much in it is subject to significant change following review of the hundred-plus questions in it.  This report analyzes opening statements, regulatory testimony and some of the subsequent Q&A; a subsequent panel outlined industry views during this late-afternoon session frequently interrupted by votes on the House floor.

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