The reverse mortgage industry stated its intentions in the Qualified Residential Mortgage conversation during a Congressional hearing last week. While FHA reverse mortgages have not been included in the potential definitions released thus far, industry representatives urged Congress to consider including private reverse mortgages among loans that will be exempt from new risk retention requirements.
This would allow private reverse mortgages to be securitized and originated without that requirement.
“We are requesting [the CFPB] create a definition of a qualified mortgage under its [Ability to Repay]-QM rule to assure that reverse mortgages, other than FHA-insured HECMs, have an opportunity to qualify for an exemption from the risk retention requirements,” said Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association, during testimony presented before the House Subcommittee on Insurance, Housing and Community Opportunity.
The CFPB is currently working on a QRM definition—a hotly debated concept among mortgage industry participants.
“Having a specific definition of a “QM” for reverse mortgages will help facilitate the return of a conventional market with proprietary products,” Bell said. “Our recommendation is that reverse mortgages that are either FHA-insured, or meet the guidelines of the FHA HECM program, should be deemed to be a qualified mortgage for purposes of the ATR-QM rule.”
Written by Elizabeth Ecker