Hensarling Has a Better Solution: Repeal QRM

Mortgage & Real Estate

The House Financial Services Committee chairman Jeb Hensarling, R-Texas, claims the federal regulators latest re-proposal of the qualified residential mortgage rule is just another admission that risk retention would harm the mortgage market.

The decision by Washington regulators to revamp these proposed regulations is another sign of the incomprehensible complexity of Dodd-Frank and also an acknowledgment that their original proposal would harm our economy and make it harder for Americans to buy a home, the chairman said.

Six regulatory agencies approved a revised QRM proposal on Wednesday that essentially exempts all loans from risk retention if they meet the underwriting standards of the qualified mortgage rule. The QM rule is also mandated by the Dodd-Frank Act and requires lenders to analyze a borrower’s ability to repay the loan.

The better solution is not to paper over the flaws in these regulations and pretend that they will work but to get rid of them altogether, and thats what the PATH Act does, the Texas congressman said.

Protecting American Taxpayers and Homeowners (PATH) Act repeals the QRM risk retention provision in the DFA.

The Financial Services Committee passed PATH Act by a 30-27 vote in July. Chairman Hensarling wants the full House to vote on the PATH bill (H.R. 2767) this fall.

But the PATH Act does not repeal the QM provision. The House bill amends the QM 3% limit on points and fees to include affiliated title charges, lender-paid compensation to mortgage brokers and makes other changes that are supported by mortgage industry groups.

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