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Investors were spooked about what exactly two top administration officials meant last week when they said the GSEs would not be exempted from pending risk-retention requirements.
March 21 -
Forthcoming regulations could make conventional mortgages more expensive to the wide swath of homebuyers and owners who can't put 20% down, depressing originations and potentially undermining the housing recovery.
March 21 -
Two top Obama administration officials said Tuesday that the GSEs would not be exempted from a pending proposal to help standardize mortgages sold into the secondary market.
March 15 -
After months of infighting, the federal banking agencies have reached an agreement on risk retention standards that would include some new rules for servicers.
March 1
WASHINGTON — The Federal Deposit Insurance Corp. said Tuesday it plans to consider the risk retention proposal at its next meeting on March 29.
The plan is widely anticipated by the mortgage industry and has been significantly delayed as regulators disagreed about how to move forward.
The Dodd-Frank Act mandated as many as seven regulators to write a rule that would require lenders to retain 5% of loans sold to the secondary market. It also calls for regulators to define a class of safe "qualifying residential mortgages" that would be exempt from the retention requirement.
Next week's FDIC meeting will be the first public release of the plan, details of which have yet to be fully revealed. The Dodd-Frank Act required regulators to finalize the risk retention rule by April, but they are expected to delay as they weigh industry comments.
The proposal is expected to suggest a 20% borrower downpayment for a loan to be considered a qualifying residential mortgage, a figure that has spurred bankers to argue many first time buyers will be shut out of the market. Lenders are also expected to be required to document a borrower's income and face restrictions on how much a payment can adjust.
Regulators are also seeking to limit refinances to 75% of the current loan-to-value ratio and cash-out refinances to 70% of the LTV.
The plan was delayed while the FDIC and Office of the Comptroller of the Currency fought over whether national servicing standards should be included as part of QRM. The proposal is expected to include some servicing standards, including forcing servicers to offer loss-mitigation workouts under certain circumstances and establishing standards to deal with second liens when a first mortgage is modified.
