In The News: “Skin in the Game” – Risk Retention Amendment to Senate Bill 3217

2017-12-20T17:34:18+00:00 May 21st, 2010|Categories: In The News|Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , |

Senate Bill 3217 Restoring American Financial Stability is working its way through the Senate and is expected to be passed in the coming weeks.  Certain provisions of this bill will have a significant impact on the mortgage industry. As you may recall, the Senate Bill 3217, as originally proposed, included a provision which would have required 5% of the risk on all loans originated be retained by the originator upon sale to investors.  The provision was not clear as to which entity or entities in the origination chain would be required to retain the risk.  It was not clear whether the risk that was to be retained would be an ownership interest in the loan or reserves supported by cash.   It was also not clear how long the originator would have been required to retain the risk.  The original provisions would have been devastating to the mortgage industry.  The 5% risk retention would have forced many mortgage originators from the business and would have driven mortgage rates much higher.  After significant industry efforts, this provision was amended last week. The amendment, as passed by the Senate, does very little to answer these questions, but what it does do is exempt [...]

BlogTalkRadio Podcast – May 17, 2010

2017-12-20T17:34:18+00:00 May 20th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , |

Senate Bill 3217 Restoring American Financial Stability was the focus of discussion on the show Monday, particularly two recently passed amendments which are of great interest to the mortgage banking industry.  The amendments deal with risk retention and loan officer compensation.  One is good for the industry and the other is not.  Glen Corso, Executive Director of The Community Mortgage Banking Project, joined the show to bring a first hand understanding of the amendments and their status. The amendment that is good for the mortgage industry deals with the risk retention provisions of the original  bill.  The original bill would have required mortgage originators to retain “skin in the game.  It would have required originators to retain 5% of the risk on all the loans they originated and sold to investors.  The amendment exempts from the 5% risk retention requirement certain mortgage loans which meet the definition of Qualified Mortgage Loans.  Since 90% or more of today’s loans will meet the definition of Qualified Mortgage Loan, the amendment significantly reduces the number of loans on which originators will be required to retain risk. The amendment that is not good for the mortgage industry restricts how loan originators are to be [...]