NCSHA Supports Bond Exemption in Risk Retention Rule

On August 1, NCSHA sent federal regulators writing rules on risk retention and qualified residential mortgage (QRM) standards comments strongly supporting the proposed rule’s exemption of municipal securities, including tax-exempt housing bonds issued by HFAs, from the rule’s risk retention requirement.  NCSHA’s letter also urged regulators to exempt all HFA-financed loans and loan-financing products used by HFAs. 

The letter also expressed concerns about the potential impact the proposed rule’s narrow QRM definition could have on the availability of affordable mortgage financing and recommended that the regulators delete the proposed rule’s section imposing servicing standards on QRM mortgages and promulgate such rules under a separate rulemaking process.

NCSHA’s comments responded to a proposed rule federal regulators, including the Securities and Exchange Commission, HUD, the Federal Housing Finance Agency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Comptroller of the Currency, released in March 2011 to implement provisions of the Dodd-Frank financial reform law requiring that asset-backed securities issuers retain a portion of the credit risk of the securitized financial assets.  The proposed rule also defined the term, “qualified residential mortgage” (QRM), and exempted securities collateralized by QRMs from the risk retention requirements.  For more information, see NCSHA’s blog post on the proposed rule.