US Agencies (the Department of Housing and Urban Development or HUD, FDIC, FED, FHFA, OCC, and SEC) are providing notice of the commencement of the review of the definition of qualified residential mortgage, the exemption of community-focused residential mortgage, and the exemption for qualifying three-to-four unit residential mortgage loans, in each case as set forth in the Credit Risk Retention Regulations that have been adopted by the agencies. The credit risk retention regulations require FDIC, FED, OCC, and SEC, in consultation with the FHFA and HUD, to commence a review of the mentioned provisions of the credit risk retention regulations no later than December 24, 2019. Comments on the review must be received by February 03, 2020.
In the Supplementary Information to the Credit Risk Retention Regulations, the agencies note that they were committing, in the final rule, to review the qualified residential mortgage definition at regular intervals to consider, among other things, changes in the mortgage and securitization market conditions and practices. This review might include the
- Structure of securitizations
- Relationship between, and roles undertaken by, the various transaction parties
- Implications for investor protection and financial stability arising from the relationship between government-sponsored enterprise (GSE) markets and private-label markets
- Trends in mortgage products in various markets and structures and how the qualified residential mortgage definition is affecting residential mortgage underwriting and securitization of residential mortgage loans under the evolving market conditions
The Supplementary Information also states that the agencies would want the opportunity to consider the results of future reviews of, and any changes made to, the qualified mortgage definition by CFPB, any additional regulatory changes affecting securitization that are adopted by the agencies, as well as any changes to the structure and framework of the GSEs and those markets. The simultaneous review of the community focused lending exemption and the exemption for qualifying three-to-four unit residential mortgage loans will similarly allow the agencies to evaluate the advantages and disadvantages of these exemptions, as their respective markets evolve over time. The credit risk retention regulations have been codified under the following sections of the Code of Federal Regulations: 12 CFR part 43; 12 CFR part 244; 12 CFR part 373; 17 CFR part 246; 12 CFR part 1234; and 24 CFR part 267.
Comment Due Date: February 03, 2019
Keywords: Americas, US, Banking, Securities, Credit Risk, Credit Risk Retention, Qualified Residential Mortgage, Securitization, US Agencies
Previous ArticleSRB Issues Update on Resolution Actions for Banco Popular
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.