One of the five draft bills proposed by the House Democrats this week seeks to establish a board that would be responsible for assigning rating services to provide grades on MBS and ABS.
When Congress passed the Dodd-Frank Act in 2010, the SEC had nine months to issue a rule on conflicts of interest in the securitization market. The proposed rule on the issue has been pending since 2011.
Stakeholders believe an alignment will ensure the most competitive mortgage terms are accessible to the broadest segment of QM-eligible borrowers while continuing to promote safe and sound lending practices.
The SEC’s Investor Advisory Committee wants increased regulatory disclosures in the sector. However, an SEC commissioner questioned the utility of the proposal.
The CFPB proposed extending the GSE “patch” through September 2022 while new leadership at the regulator considers revisions to the general QM standards.
More non-agency originations, lower market share of non-QMs and securitization of riskier loans are likely consequences of the CFPB’s new QM standards.
Sterling Bank has offered to buy back all non-QMs after uncovering various problems with its lending program. Between May and July, the bank repurchased loans from five MBS, taking a loss.
Some industry groups are concerned that the CFPB’s proposal to revise general QM standards contains unclear underwriting standards and legal uncertainties. They support the development of self-governance standards for the non-agency market.
Federal regulators have delayed their review of risk-retention requirements until next year. Also, most regulatory actions planned for MBS and ABS fall into the “long-term” category.
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