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Wednesday, March 5, 2014

ABA Asks Regulators to Review Basel III

ABA, along with a number of trade associations and lawmakers have asked for the review of the current Basel III rules, that currently limit mortgage servicing assets to 10% of a bank’s Tier I common equity. Assets under the 10% cap would be risk-weighted at 250%. Combined holdings of mortgage servicing are limited to 15%. ABA has proposed raising the 10% threshold to 25% and eliminating the 15% cap altogether.

ABA’s Bob Davis, EVP, Mortgage Markets, Financial Management & Public Policy commented:

“We are calling on regulators to revisit this, because you want banks to service the loans they make to customers and you don’t want to drive servicing out of banks. You are creating an environment that makes it harder for banks to hold servicing assets.”

Read the rule.

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