The definition of what or will not constitute a qualified residential mortgage may be the most important and least appreciated or understood financial regulation facing credit unions this year.
That is part of the message that CUNA Mutual Mortgage Insurance and CUNA have been trying to drive home to CUs as the comment period on the proposed definition comes to a close on August.
Created by the financial reform law, qualifying residential mortgages will be mortgage loans from which issuers of mortgage-backed securities will not need to retain 5% of their original balance to help guarantee their soundness. This, politicians and regulators hope, will lead mortgage lenders to make greater numbers of sound mortgage loans and increase the cost of making the sorts of complex or opaque mortgage loans that contributed to the housing mortgage crisis in 2008.
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