Federal Agencies Revising QRM Rule?

The Federal Reserve, Federal Deposit Insurance Corp., Department of Housing and Urban Development, Federal Housing Finance Agency, Office of the Comptroller of the Currency, and Securities and Exchange Commission are reportedly working on a ‘softer’ version of the qualified residential mortgage (ORM) rule proposed under the Dodd-Frank Act.

According to a report in Bloomberg News, the agencies are collaborating on the development of a 500-page draft regulation that will require lenders to keep a certain percentage of mortgages on their own books.

The new regulation, which may be introduced as soon as next week, will require banks to retain a slice of mortgages when borrowers are spending more than 43% of their monthly income on all of their debt, according to the report. An earlier version of the rule would have required banks to keep a stake in loans when borrowers were spending more than 36% of their income on all loan payments and in loans with a down payment of less than 20%.

The new version of the rule will carve out mortgages backed by Fannie Mae and Freddie Mac, according to sources that spoke to Bloomberg News on the condition of anonymity.

The agencies will seek public comment before each holds a vote on the final rule.

The new QRM rule is a separate regulation from the Consumer Financial Protection Bureau's Ability-to-Repay/Qualified Mortgage rules, although it contains similar provisions, such as the 43% debt-to-income requirement.

Last week, the Consumer Financial Protection Bureau (CFPB) released a more complete and updated set of FFIEC exam procedures for Regulations Z, X and B, reflecting the new mortgage rules.

On Aug. 14, the CFPB updated its Ability to Repay/Qualified Mortgage rules compliance guide, based on revisions to the rules that were approved in May and July.


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