FDIC’s Revised QRM Rule Could Impact CUs, NAFCU Says
Even though the NCUA was not among six federal agencies who said Wednesday they will revise their proposed qualified residential mortgage rules, credit unions could still feel the effects of the change.
The revisions will put the six agencies, which include the FDIC, in line with the Consumer Financial Protection Bureau’s definition of a qualified mortgage.
The revised rule from the FDIC and the other agencies also requested comment on an alternative definition of QRM that would include additional underwriting standards not included in the CFPB’s rule.
Carrie Hunt, NAFCU general counsel and senior vice president of government affairs, said her trade group appreciates the effort to align the two definitions, but added she has concerns.
“While the second proposal is an improvement to the first, we believe it will still have a negative downstream effect on credit unions,” Hunt said. “As such, we will thoroughly study the proposal and work with the FHFA and the other agencies to provide relief for credit unions from the rule’s effect on their mortgage lending.”
The rule would provide asset-backed securities sponsors with several options to satisfy Dodd-Frank mandated risk retention requirements.
According to an FDIC release, the original proposal generally measured compliance with the risk retention requirements based on the par value of securities issued in a securitization transaction and included a so-called premium capture provision.
The agencies are now proposing that risk retention generally be based on fair value measurements without a premium capture provision.
Similar to the original proposal, under the new proposal, securitizations of commercial loans, commercial mortgages, or automobile loans of low credit risk would not be subject to risk retention.
Further, the rule would recognize the full guarantee on payments of principal and interest provided by Fannie Mae and Freddie Mac for their residential mortgage-backed securities as meeting the risk retention requirements, as long as Fannie and Freddie are in conservatorship and have capital support from the U.S. government. This provision also is unchanged from the original proposal.
The agencies are requesting comment on their revised proposed rule by Oct. 30.