Mortgage Bankers Say Risk Retention Will Force Them Out of Business

[FarCenter]

The Community Mortgage Lenders of America (CML America) warned today that risk retention provisions in the “Restoring American Financial Stability Act” will force them out of business.

The bill would require lenders and issuers of securitized mortgages to retain as much as 10 percent of a loan sold on the secondary market, a measure intended to improve underwriting quality.

The group sent a letter to Senate Banking Committee Chairman Christopher Dodd on behalf of 87 community mortgage bankers from throughout the country that see $120 billion in annual mortgage production.

“We firmly believe that the language, which establishes an across-the-board credit risk retention requirement, will sharply increase borrowing costs, dramatically restrict the availability of affordable mortgage options, and cut short efforts to stabilize the fragile housing market,” the CML argued.

<SNIP>

The originate-to-distribute model of loan origination has been largely to blame for the mortgage crisis, as such a system promoted volume over quality.

http://www.thetruthaboutmortgage.com/mortgage-bankers-say-risk-retention-will-force-them-out-of-business/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+TheTruthAboutMortgagecom+(TheTruthAboutMortgage.com)

[ArcticFox]

1. Risk? What risk?

If they can't even risk 10% of a loan, that says everything anybody needed to know about the banks' confidence in their underwriting.

Let's get back to the good old days when banks made money steadily over time, and their well-being depended on proper consideration of the consequences of their actions.

[Double T]

2. Then let the mortgage bankers go out of business.

The time has come to scrap the current banking system and start over; heavy duty rules and regulations should be the top priority.

[PJPhreak]

3. Poor fuckin babies...

"let them eat Dollar Bills"

Paper has a bit of nutritional value.

Assholes

[anonymous171]

4. Good. nt

[MadMaddie]

5. Well that works out just fine for Americans ...

The companies that have been getting a free ride with limited regulation are getting checked. If they don't have a sound business model then they go under, too fucking bad.

[knowbody0]

6. a lecherous cog in an unnecessary machine

serves no purpose for humanity, does not serve any greater good. let them die.

[On the Road]

7. This is Great --

I had thought mortgage bankers might have been required to hold the mortgages for a couple of years before selling to the secondary market.

On the opposite side, I dont' know if holding 10% of loans until maturity is going to reduce the volume of mortgages they can write. If it does, it could kill any recovery in housing dead.