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Traditionally, August can be a wasteland for banking policy wonks as Congress takes a summer recess. But here's why next month could actually be an eventful one.
July 25 -
Six federal agencies have re-issued their proposal for defining "qualified residential mortgages" that avoid risk retention, which is more to the industry's liking than a 2011 plan. But a much tougher alternative is still drawing attention.
August 28 -
The risk retention requirement was supposed to ensure lenders had "skin in the game" when making mortgages. Instead, regulators appear to have abandoned that concept by crafting an exception so large that most single-family mortgages will be exempted.
September 3
WASHINGTON Regulators will unveil a long-awaited final rule next week that requires lenders to retain some of the risk for loans they securitize in the secondary market, a critical part of the Dodd-Frank Act that the agencies have struggled to implement.
The Federal Deposit Insurance Corp. announced Thursday that its board will meet in open session on Oct. 21 to discuss the final risk retention rule, which includes an exemption for loans defined as "qualified residential mortgages." The Federal Reserve Board will discuss the rule in a meeting one day later.
The 2010 financial reform law required securitizers to retain 5% of the credit risk of loans they sell into the secondary market, but gave the agencies the power to define an ultra-safe class of loans QRM that were exempt from risk retention.
Regulators first tried to define QRM in 2011, but that plan, which would have required borrowers to make a 20% down payment, among other requirements, was vigorously opposed by the financial industry. A second stab at a proposal was unveiled in August of last year, removing the controversial down payment requirement.
The 2013 plan has been criticized, however, because it would grant QRM status to a large swath of the mortgage market, essentially defeating the purpose of creating an ultra-safe class of loans.