June 11, 2012
Senate Seal.jpg

At a June 6 Senate Banking Committee hearing on the implementation of the Dodd-Frank financial reform law, financial regulators confirmed they plan to publish the ability-to-repay rule and qualified mortgage (QM) definition later this year and the qualified residential mortgage (QRM) definition and risk retention regulations would not be published until after the QM rule.  The QM and QRM rules are required by the Dodd-Frank Act. 

During the hearing, Senator Mike Crapo (R-ID) asked Consumer Financial Protection Bureau (CFPB) Director Richard Cordray about the status of the ability-to-repay rule and the QM definition.  Cordray said the CFPB recently reopened the comment period on the previously published proposed rule to ensure the final rule is based on sound data analysis and does not unduly restrict access to credit.  Cordray also mentioned that the CFPB is on track to meet the January 2013 statutory deadline for releasing the final rule.  More information on the extended comment period is available here.

Crapo then asked Daniel Tarullo, Member of the Board of Governors of the Federal Reserve System; Thomas Curry, Comptroller of the Currency; and Martin Gruenberg, Acting Chairman of the Federal Deposit Insurance Corporation when they believed the final QRM rule would be completed, given that the QRM standards are meant to be broader than the QM standards.  The proposed QRM rule requires originators and securitizers of financial assets to retain a portion of the credit risk of the securitized financial assets unless the assets are defined as QRMs.  All three witnesses agreed that they expect the publication of the final QRM rule will come after the CFPB's release of the final QM rule.  This means that is it very likely that the final QRM rule will not be published until sometime in 2013.