A proposed mortgage definition that analysts say could arrive this week promises to have a strong impact on the sort of secondary mortgage market credit unions will face one day.
The regulation will propose a definition for a qualified residential mortgage. QRMs are mortgages that have the kinds of underwriting and terms that have historically not led to defaults and are thus deemed at less risk than others.
This is significant because institutions seeking to bundle and package mortgages into securities for sale on the secondary market will have to retain 5% of the loan's balance on their books as a risk premium meant motivate them to write and sell better mortgages unless they create their secondary mortgage securities out of QRMs.
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