Credit union mortgage organizations and trade associations are casting a wary eye on a proposed regulation meant to encourage issuers of mortgage-backed securities to use safer mortgages to back their bonds.
On the surface this would not seem to be a credit union issue. Credit unions do not issue mortgage-backed bonds. But credit unions do issue mortgages, and, from time to time, seek to sell those mortgages in the secondary market that will be directly impacted by this regulation.
The proposed rule, issued by almost all federal financial regulators except the NCUA, uses a two-pronged approach to reach its goal of encouraging more mortgage-backed securities backed by safer mortgages. The first tine is the so-called "skin in the game" rule that does not have much of an impact on credit unions. The second tine is the "qualified residential mortgage" that is liable to have a significantly greater impact.
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