WASHINGTON — Banking regulators said Tuesday they have extended the comment deadline for their risk retention proposal until Aug. 1 due to the "complexity of the rulemaking."
Regulators released the proposal in March, and originally gave until June 10 for any comments. Regulators said they wanted to give "interested persons more time to analyze the issues and prepare their comments."
The proposal, issued jointly by the Federal Reserve Board, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp. and other agencies, would require lenders to retain 5% of the credit risk for loans they securitize. But the proposal also created an exemption for "qualified residential mortgages" that met certain strict underwriting criteria.
The decision to delay, at least temporarily, is due to the uproar that has been caused by the proposal — mortgage bankers, consumer advocates and even lawmakers have expressed serious concerns about the impact of the plan.
Nearly 40 lawmakers last month pressed regulators to expand their proposed exemption from risk-retention rules mandated by Dodd-Frank.
They, and others, argue that a 20% down payment — which would be required to earn the label of QRM — goes too far and would keep too many borrowers from getting a loan.
