Dodd-Frank Risk Retention and PCCRA
Issue: The Dodd-Frank Act requires entities that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is a qualified commercial real estate (QCRE) loan or is otherwise exempt. NAR believes the six federal regulators should withdraw, revise and republish the rule for public comment because the rule:
• Is inconsistent with the standards set forth for risk retention in title IX of the Dodd-Frank Act and violates congressional intent.
• Unnecessarily defines the QCRE exemption from the risk retention requirements to include only a narrow slice of the mortgage market.
• Jeopardizes the fragile commercial real estate market and general economic recovery.
• Reduces liquidity and increases borrowing costs for commercial real estate.
NAR is also concerned with the six banking agencies’ risk-retention proposal, which contained a requirement that scrutinizers set aside the profits from sales of securities in a “premium capture cash reserve accounts” (PCCRAs). This provision would greatly reduce the securitization market for many asset classes, thereby reducing a vital source of capital for the commercial real estate industry.
Action: NAR has sent multiple letters to the U.S. House and Senate committees along with comments to regulators in support of polices that enhance the flow of credit to the commercial real estate industry. NAR has also testified at three Congressional hearings in the 112th Congress before the U.S. House Financial Services Committee on the requirements of Dodd-Frank. NAR will continue to advocate for federal policy initiatives that strengthen the ability of those who rely on the commercial real estate market for their livelihood.
Learn about key issues, NAR’s position, and how they affect REALTORS®, homebuyers, and private property owners by clicking here.