The Federal Reserve Board of Governors unanimously issued a revised Basel III final rule this week that abandons the proposed changes to the risk-weighting of residential mortgages, but presses ahead with the proposed new treatment of mortgage servicing rights. In backing off the proposed changes for residential mortgages, Fed officials cited community bank concerns about the complexity of calculating loan-to-value ratios under the proposed regime. They also emphasized concerns about the unknown interaction the proposed changes would have with other mortgage-related rulemakings confronting the industry, most notably the Consumer Financial Protection Bureau’s “qualified mortgage” standard as well as the qualified residential mortgage definition, which is still in development by federal regulators. “In light of new regulations designed to improve the quality of mortgage underwriting as well as continued uncertainty regarding the aggregate impact of pending mortgage-related rulemakings, the draft final rule does not include...