Page:United States Statutes at Large Volume 124.djvu/1921

 124 STAT. 1895 PUBLIC LAW 111–203—JULY 21, 2010 ‘‘(i) documentation and verification of the financial resources relied upon to qualify the mortgagor; ‘‘(ii) standards with respect to— ‘‘(I) the residual income of the mortgagor after all monthly obligations; ‘‘(II) the ratio of the housing payments of the mortgagor to the monthly income of the mortgagor; ‘‘(III) the ratio of total monthly installment payments of the mortgagor to the income of the mortgagor; ‘‘(iii) mitigating the potential for payment shock on adjustable rate mortgages through product features and underwriting standards; ‘‘(iv) mortgage guarantee insurance or other types of insurance or credit enhancement obtained at the time of origination, to the extent such insurance or credit enhancement reduces the risk of default; and ‘‘(v) prohibiting or restricting the use of balloon payments, negative amortization, prepayment pen- alties, interest-only payments, and other features that have been demonstrated to exhibit a higher risk of borrower default. ‘‘(C) LIMITATION ON DEFINITION.—The Federal banking agencies, the Commission, the Secretary of Housing and Urban Development, and the Director of the Federal Housing Finance Agency in defining the term ‘qualified residential mortgage’, as required by subparagraph (B), shall define that term to be no broader than the definition ‘qualified mortgage’ as the term is defined under section 129C(c)(2) of the Truth in Lending Act, as amended by the Consumer Financial Protection Act of 2010, and regula- tions adopted thereunder. ‘‘(5) CONDITION FOR QUALIFIED RESIDENTIAL MORTGAGE EXEMPTION.—The regulations issued under paragraph (4) shall provide that an asset-backed security that is collateralized by tranches of other asset-backed securities shall not be exempt from the risk retention requirements of this subsection. ‘‘(6) CERTIFICATION.—The Commission shall require an issuer to certify, for each issuance of an asset-backed security collateralized exclusively by qualified residential mortgages, that the issuer has evaluated the effectiveness of the internal supervisory controls of the issuer with respect to the process for ensuring that all assets that collateralize the asset-backed security are qualified residential mortgages. ‘‘(f) ENFORCEMENT.—The regulations issued under this section shall be enforced by— ‘‘(1) the appropriate Federal banking agency, with respect to any securitizer that is an insured depository institution; and ‘‘(2) the Commission, with respect to any securitizer that is not an insured depository institution. ‘‘(g) AUTHORITY OF COMMISSION.—The authority of the Commis- sion under this section shall be in addition to the authority of the Commission to otherwise enforce the securities laws. ‘‘(h) AUTHORITY TO COORDINATE ON RULEMAKING.—The Chair- person of the Financial Stability Oversight Council shall coordinate all joint rulemaking required under this section.