On the recordMarch 2, 2011
I want to also point out for the record--and hopefully also for the right people--that we are at a critical point in terms of housing in America, with Dodd-Frank having been passed and newly promulgated rules. It is essential that we don't make the mistakes that led us to the last collapse that caused the tragedy in the housing market in 2007, 2008, and 2009. In the Dodd-Frank bill, there was an amendment called the qualified residential mortgage, which was offered by Senators Landrieu, Hagan, and myself to ensure that the risk retention provisions of Dodd-Frank would not apply to a well-underwritten, well-qualified loan. Risk retention, as the Chair remembers, is the 5-percent retention requirement of any lender who made a residential mortgage that was not qualified, but they were not specific in their definition of what a qualified mortgage would be. So we took the point to take the historical underwriting standards that have proven to work so well in this country and write them into the Dodd-Frank bill, which were that a mortgage that may be exempted from a risk retention would have to have 20 percent down, and if there was more than 80 percent loan to value, that amount above 80 percent would have to be covered by private mortgage insurance.
