Johnny Isakson United States Senator

Isakson Urges Federal Regulators to Create "Gold Standard" in Mortgage Reform

Dec 18, 2010

WASHINGTON – U.S. Senator Johnny Isakson, R-Ga., today urged federal regulators to create a gold standard of “qualified residential mortgages” that will pose less risk to borrowers, lenders and investors, and that will result in a fewer borrowers defaulting on loans.

“The crisis we experienced in large foreclosures, defaults and declines in housing values will only be cured in time when we return to a strong and vibrant lending market where qualified loans and qualified borrowers come together to fuel the housing market once again,” Isakson said.

Isakson, who spent three decades in the real estate industry, has pushed for the past year for regulators to set new standards for what constitutes a “qualified mortgage.”

“These criteria would allow borrowers, lenders and investors to have more confidence on moving forward with good loans,” Isakson said.

Isakson, along with Senators Mary Landrieu, D-La., and Kay Hagan, D-NC, cosponsored a bipartisan amendment to the Wall Street Reform and Consumer Protection Act of 2010 earlier this year that added the exemption for “qualified residential mortgage” to the risk retention provisions of the bill. That legislation was signed into law on July 21, 2010.

On Nov. 8, 2010, Isakson, Landrieu and Hagan sent a letter to federal regulators to ensure that the amendment, part of the 941-B requirement in the bill, was interpreted correctly as to the meaning of the “gold standard.” Specifically, they wrote that the intention of the amendment was to direct regulators to have a specific set of criteria on which to base mortgages. The new standard would provide access to safe, stable and affordable home loans for creditworthy borrowers while granting investors confidence that the mortgage assets backing the securities they purchase will meet or exceed their performance expectations.