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| Title: | MBA Sends Recommendations to Federal Agencies on Risk Retention Guidelines from Commercial and Multifamily Mortgage Finance Perspective | | Source: | MBA | | Date: | 7/13/2011 |
Members of Media:
On Monday, July 11, 2011, the Mortgage Bankers Association (MBA) sent the attached letter to federal regulators outlining
MBA's views and recommendations from the commercial and multifamily mortgage finance perspective in response to the proposed
risk retention rule under Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
In its letter, MBA commends federal regulators for the extensive effort and coordination in implementing the risk retention
provisions of the Act, underscoring the importance of aligning interests among market participants and policy actions that
facilitate the establishment of a transparent, liquid and responsible securitization market. MBA's letter supports the proposed
rule's flexible approach to risk retention and recommends additional structures that would support liquidity in the commercial/multifamily
real estate sector. MBA, however, strongly opposes the proposed Premium Capture Cash Reserve Account (PCCRA), which would
effectively eliminate the incentives for securitizations that provide liquidity to this market. In lieu of the PCCRA, MBA
proposes risk retention calculation methodologies that would serve the policy purposes underlying risk retention. In addition,
MBA's letter addresses the conditions under which third-party, "B-piece" purchasers could meet the risk retention requirements
and recommends a more targeted role for the proposed "operating advisor." Finally, MBA proposes underwriting metrics for
loans that would qualify for zero risk retention that are better aligned with low-risk loan characteristics and more consistent
with commercial/multifamily real estate lending practices.
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