FDIC to Propose "Qualified Residential Mortgage" Definition

The debate over what counts as a "Qualified Residential Mortgage (QRM)" may be coming to an end in the near future.  The Federal Deposit Insurance Corporation (FDIC) has scheduled a meeting of its Board of Directors for next Tuesday to vote on the issue. A draft of the proposed rule will be made available to the public at that time.

QRMs are home loans that will be exempt from the requirement that mortgage lenders retain a 5 percent share of each loan they originate that is packaged for securitization - keeping so-called "skin in the game."  Dodd-Frank specifically identified loans guaranteed or originated by FHA, VA, and USDA as qualified for exemption but left other products, including loans written by Fannie and Freddie, up to federal regulators to determine. 

Glen Corso, managing director of the Community Mortgage Banking Project (CMBP), said the FDIC meeting announcement implies a substantial amount work on the QRM is complete and all of the regulators have signed off on the proposal.  Corso said it appears that the FDIC will move first on the rule, and "we expect that the other agencies -- OCC, the Fed, HUD, SEC and the FHFA -- will be approving the rule in the days following the FDIC's action."  Once the agencies sign off the rule will be published in the Federal Register and a period of public comment (typically 60 days) will begin.   

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