After President Obama's comment regarding the housing market becoming constrained with regulations, bank regulators may start to feel the pressure to ease back on pending mortgage rules.
"Now that we've made it harder for reckless buyers to buy homes that they can't afford, let's make it a little bit easier for qualified buyers to buy the homes that they can afford," Obama said in the housing speech on Tuesday. "So [Department of Housing and Urban Development Secretary] Shaun Donovan has been working with the finance industry to make sure we're simplifying overlapping regulations; we're cutting red tape for responsible families who want to get a mortgage but keep getting rejected by the banks."
Many said the president was speaking of the separate rules which define "qualified mortgages" and "qualified residential mortgages." The Consumer Financial Protection Bureau, created under the Dodd-Frank Act, released its final QM rule in January, but regulators have yet to finalize the QRM definition.
"Regulators are expected to re-propose the QRM definition soon, and may tie its definition directly to QM. Under Dodd-Frank, lenders must hold 5% of the credit risk of any mortgage they securitize, unless it is considered a qualified residential mortgage. The six agencies involved in the rule-writing proposed in 2011 to make that exemption very narrow, including requiring a 20% down payment as part of the criteria. But lawmakers and the industry said that was too extreme," writes American Banker's Rachel Witkowski.
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