More than four years after the start of the sub-prime crisis, the U.S. housing finance market is poised for a set of mortgage market rules that lenders, secondary market makers and consumer-protection advocates view as too conservative.
It is feared that the tough credit-risk retention rules could eliminate the role of securitization in the private market, while other aspects of Dodd-Frank relating to mortgage finance and consumer protection will add many new expenses for lenders.
Parts of the Dodd-Frank Act aimed at reining in dangerous lending practices and discouraging risky mortgage products have been hailed as bringing sensible underwriting standards to the once-profligate market. For example, Dodd-Frank introduces commonsense ability-to-repay requirements, stating simply that lenders must verify the borrower's ability to repay a loan. It also introduces qualified mortgage (QM) requirements to encourage sound underwriting.
Credit risk-retention rules have, however, been
This article is only available in full to Compliance Complete
North America Subscribers who are logged in.
Please log in to see if you can view this content.
