The Consumer Financial Protection Bureau may gain an upper-hand in the mortgage sphere because of regulators' plan to unite two separate mortgage standards mandated by the Dodd-Frank Act.

Under the 2010 reform law, the "Qualified Mortgage" and the "Qualified Residential Mortgage" were established with a distinct designation where the QM boosts underwriting standards and the QRM provides investors with a class of ultra-safe loans.

A recent proposal by the Federal Deposit Insurance Corp., Federal Housing Finance Agency, Federal Reserve Board, Office of the Comptroller of the Currency, Department of Housing and Urban Development and Securities and Exchange Commission links the QRM to the QM definition determined by the CFPB.

"In effect, the CFPB is writing the regs for what is QRM," said Kevin Petrasic, a partner at Paul Hastings. "The way that the re-proposal is structured, the six agencies wouldn't have to do anything and in effect a new regulation would be implemented for QRM by the CFPB."

"The regulators' QRM proposal added that any change made by the CFPB to QM would automatically apply to QRM as well," writes American Banker's Joe Adler.

For the full piece see "Why the CFPB Could Gain Monopoly Over Mortgage Rules" (may require subscription).