The six regulatory agencies working on the risk retention rule are considering a proposal to extend the comment period until August 1, according to industry officials.
The comment period is slated to end June 10 unless all the agencies agree to an extension. It is understood that it takes only one vote by an agency to kill an extension.
The proposed rule requires securitizers to retain 5% of the credit risk on a pool of mortgages. However, prudently underwritten loans with low default rates can be exempt if they meet the regulators’ requirements for “qualified residential mortgages.”
The regulators proposed a very narrow QRM exemption by requiring 20% downpayments on the loans and tight debt-to-income ratios.
This narrow QRM has generated widespread criticism from industry and consumer groups as well as senators and congressmen.
The American Bankers Association, Mortgage Bankers Association, National Association of Realtors and consumer groups met Thursday with regulators to press for an extension. These groups previously requested a 60-day extension in a May 13 letter, noting that the 350- page proposal includes almost 170 questions that require data development and analysis.
“For this and other reasons, we respectfully but strongly request” an extension of the comment period, the joint letter says.
