doesn't replace lean manufacturing methods, but when there's a customer need for a one-off or custom product, QRM
has more positive aspects vs.
But CUNA Mutual and CUNA executives argued strongly in a July 18 webinar about the QRM
debate that credit unions should care passionately about how QRMs
are defined and should weigh in on the discussion among the regulators.
The proposed QRM
exemption requires a high down payment--proposed at 20%, with even higher levels of minimum equity required for refinancing--even though that isn't considered a significant factor in reducing defaults.
Other examples where copulas enter naturally in the realm of QRM
concern aggregation of risk measures within a given risk class, operational risk, say, or between risk classes (market, credit, operational, underwriting, etc.
As one of the primary principles of QRM
states, "the degree of rigor and formality of quality risk management should reflect available knowledge and be commensurate with the complexity and/or criticality of the issue to be addressed.
The industry also wanted the QRM
rule to mirror the Qualified Mortgage (QM) definition, which is another byproduct of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Rule also contains safeguards against abuse of the QRM
(and other qualifying asset) exemptions, such as imposing repurchase obligations on the sponsor if it is subsequently determined that any loan does not satisfy the QRM
Securitization of QRMs
exempts issuers from risk retention and premium capture requirements so resolving these definitions will be a critical breakthrough for restarting the private-label RMBS market,' said Senior Director Suzanne Mistretta.
Specifically, the Realtors objected to the requirement that most QRM
borrowers will have to make a 20% down payment.
The final rule aligns the QRM
definition with that of a Qualified Mortgage as defined earlier by the Consumer Financial Protection Bureau (CFPB).
The proposed QRM
definition appears to conflict directly with the Obama administration's preference for shrinking FHA from its current role of financing one-third of all mortgages," wrote Michael Berman, chairman of the Mortgage Bankers Association in testimony before the House Financial Services Committee on May 25.
While a full-blown QRM
program, needed for a new API, is not needed, the approach should be similar.