ABA wrote to Sen. Heidi Heitkamp (D-N.D.) yesterday thanking her for introducing S. 1974, the Relationship Lending Preservation Act. The bill would provide the same regulatory treatment to mortgages sold to the Federal Home Loan Banks that Qualified Mortgages and GSE loans currently enjoy.
“ABA has long argued that loans originated by a bank and held in that bank’s portfolio should be given [QM] status, as the credit and underwriting risk borne by the bank will ensure that the loan is underwritten to high quality standards,” ABA said. “Like loans held in portfolio by banks, [FHLB] loans are well underwritten, and safety and soundness concerns will require that the ability of borrowers to repay the loan is well established.”
ABA asked Heitkamp to expand the bill’s coverage to all loans sold to the FHLBs, regardless of originator size, since underwriting standards for these loans do not differ for lenders of different sizes.