Considerable uncertainty surrounds the recently postponed issuance of the mortgage securitization regulations required by the Dodd-Frank Act (DFA). In particular, two critical decisions involve the required risk retention contained in the DFA. The forthcoming directives will clearly have a major impact on the competitive and economic structure of the mortgage industry in the future.
In my opinion, the potential for a series of bureaucratic decisions to profoundly impact the economics of mortgage lending highlights how far the flawed “skin in the game” argument has been removed from its original purpose of insuring quality underwriting. I favor as broad an interpretation of the QRM standard as possible, as well as a vertical risk retention definition, simply because these will have the smallest potential impact on the competitive structure of the mortgage lending industry.
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Source: http://www.mortgagenewsdaily.com/02012011_risk_retention.asp
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