Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, once again urged regulators to finalize a qualified residential mortgage risk retention rule that will not limit access to safe loans, National Mortgage News reported Oct. 2.
Speaking in Washington, D.C., at a housing forum sponsored by the American Action Forum and Progressive Policy Institute, Donovan stressed that the QRM rule mandated under the Dodd-Frank Act should be drafted to require risk retention for irresponsible loans originated during the housing boom.
“We need to remember that the goal of this (rule) is not to place further limits on today’s tight credit standards, but, rather, to ensure that access (to credit) we are encouraging doesn’t cause another crisis,” Donovan told the forum, National Mortgage News reported.
Six regulatory agencies, including HUD, have been drafting the QRM rule for more than a year. Donovan’s comments implied that regulators still are at a stalemate about whether the definition of a QRM should be narrow or broad.
“Less than 15 percent of the loans originated in 2006 would qualify under the even broader definitions that are being considered for QRM,” Donovan said, National Mortgage News reported.
The QRM rule will determine what single-family loans qualify for exemption from risk retention. Securitizers must retain 5 percent of the credit risk on loans that are not exempt. The Dodd-Frank Act exempted Fannie Mae, Freddie Mac and Federal Housing Administration loans from risk retention.