Final QRM rule released

The Federal Deposit Insurance Corporation was the first of six financial regulators to release the final version of the long-awaited qualified residential mortgage (QRM) rule, which stems from the banking reform legislation the federal government enacted after the financial crisis. The QRM rule provides a set of requirements a loan must meet to be considered safe and eligible to be sold to investors as part of a mortgage-backed security without the lender having to retain five percent of the loan amount on its books. Because the QRM loan comes without the risk-retention requirement, lenders should be able to make more loans because they do not have to pass along that risk-retention cost to borrowers.

Under the QRM rule, as under the QM rule, loans are generally considered qualified if the borrower's debt-to-income ratio is 43 percent and there is no onerous down payment requirement. For more information on the final QRM rule, click here.