Following requests from trade groups, regulators announced this week they will extend the comment period on proposed rules to implement credit risk requirements under the Dodd-Frank Act. The comment period will extend through August 1, rather than the June 10 deadline that was initially in place.
“Due to the complexity of the rulemaking and to allow parties more time to consider the impact of the Credit Risk NPR on affected markets, the Agencies have determined that an extension of the comment period until August 1, 2011 is appropriate,” the governing agencies wrote. “This action will allow interested persons additional time to analyze the proposed rules and prepare their comments.”
The credit risk requirements under discussion include a risk retention proposal that would require lenders to retain 5% of the credit risk associated with mortgages pooled into securities, with Qualified Residential Mortgages (included HECM loans) as exceptions to the rule. A QRM would require a 20% downpayment for non FHA-insured loans.
In recent weeks, several groups including the American Bankers Association, Mortgage Bankers Association, National Association of Home Builders and National Association of Realtors, among others, urged regulators to postpone the comment deadline to ensure the comment period for the risk retention proposal is consistent with comments on the qualified mortgage (QM) presumption/safe harbor under the Ability to Repay provisions.
Others have spoken out against the rule in general, including a group of 40 senators who have expressed concern over the stringent lending requirements and the potential impact on consumers’ ability to get a mortgage.
“The proposed regulation also establishes overly narrow debt to income guidelines that will preclude capable, creditworthy homebuyers from access to affordable housing finance,” the senators wrote in late May.
Find out more about the extension.
Written by Elizabeth Ecker