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The groups said the existing framework after the financial crisis was designed to strengthen banks’ resilience. But they argue that the mortgage market has changed significantly since then. Reforms such as the Ability-to-Repay and Qualified Mortgage rules now limit risky features such as negative amortization, option ARMs, interest-only loans, and mortgages without documentation. Banks’ participation […]
According to her, regulators should investigate whether prudential standards have contributed to the contraction and whether the standards reflect the actual risks. “In part, this is due to an overcalibration of capital treatment for these activities, resulting in requirements that are disproportionate to the risk and making mortgage activities too expensive for banks to participate […]
