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ABA Supports Re-Proposed Qualified Residential Mortgage Rule


Oct 31 - In a comment letter sent to regulators, the American Bankers Association expressed strong support for the re-proposed Qualified Residential Mortgage standard. The revised proposal aligns QRM with the CFPBs Qualified Mortgage rule, released earlier this year.

A QRM standard that mirrors the CFPBs QM rule is a big step forward in strengthening the housing market, said Frank Keating, ABA president and CEO. QM loans will be well underwritten and cannot include risky features, so it makes little sense to define QRM more narrowly.

According to the letter, the revised rule reduces the risk of default and delinquency, provides clarity and consistency for mortgage professionals, and ensures creditworthy homebuyers have access to safe mortgage financing.

The association warned that an alternative approach included in the proposal, known as QRM-plus, which requires borrowers to put 30 percent down, will constrain the availability credit and should not be adopted.

ABA also urged regulators to make changes to the broader risk retention proposal, including an amendment to permit proportionate allocation of risk retention to originators, rather than a 20 percent minimum.

In addition to its comment letter, ABA along with an extensive coalition of housing and consumer advocates, community groups and trade associations sent a white paper to regulators expressing support for the QRM re-proposal. In the white paper, the Coalition for Sensible Housing Policy explained that aligning QM with QRM protects the marketplace while ensuring borrowers have access to safe mortgages.

ABA and its subsidiary, ABA Securities Association, also joined with the Securities Industry and Financial Markets Association and the Financial Services Roundtable to file a comment letter on QRM and a number of other credit risk retention issues.

Click here to read the letter.