, all else being equal. the first reason is the possible increase in foreclosure losses and litigation costs. although these costs, in the aggregate, are expected to be small, their full extent will not be known until the courts settle any abilityto - repay suits that may be brought forward. 14 the second reason is that mortgages that do not meet the qm definition will also not qualify as qrms, so lenders will be required to hold some of the risk if these loans are securitized. 15 the third reason is that loan originators will have better information than investors on the quality of the underwriting decision. investors may demand a premium to compensate them for the concern that originators might sell them the loans most vulnerable to ability - to - repay lawsuits. the fourth reason is that the non - qm for more on ability - to - repay requirements and the definition of a qm, see cfpb ( 2013 ), “ ability to repay and qualified mortgage standards under the truth in lending act ( regulation z ), ” regulations : final rules issued by the cfpb 2013, webpage, january 10. for information on loan originator compensation, see cfpb ( 2013 ), “ loan originator compensation requirements under the truth in lending act ( regulation z ), ” regulations : final rules issued by the cfpb 2013, webpage, january 20. the cfpb estimates of these costs are available at section vii. e. 3. if a mortgage - backed security is collateralized by “ qualified residential mortgages, ” as defined by federal regulators consistent with section 941 of the dodd - frank act, the securitizer is not required to retain any risk in the securitization transaction. otherwise, the securitizer must retain an economic interest in the transaction consistent with section 941 and any regulations established thereunder, which may increase the securitizer ’ s costs. the dodd - frank act requires that federal regulators set the definition of a qrm to be no broader than the definition of a qm. bis central bankers ’ speeches market, at least initially, may be small and illiquid, which would increase the cost of these loans. the higher costs associated with non - qm loans should have very little effect on access to credit in the near term because almost all current mortgage originations meet the qm standard. the vast majority of current originations are eligible to be purchased, ins

applications have expanded much more over the past year and a half than lenders ’ ability to process these loans. for example, one measure of capacity constraints – the number of real estate credit employees – has only edged up over this period ( figure 13 ). when capacity constraints are binding, lenders may prioritize the processing of easier - to - complete or more profitable loan applications. indeed, preliminary research by the board ’ s staff suggests that the increase in the refinance workload during the past 18 months appears to have been associated with a 25 to 35 percent decrease in purchase originations among borrowers with credit scores between 620 and 680 and a 10 to 15 percent decrease among borrowers with credit scores between 680 and 710. 11 any such crowding - out effect should start to unwind as the current refinancing boom decelerates. other factors holding back mortgage credit, however, may be slower to unwind. as the sloos results indicate, lenders remain concerned about putback risk. the ability to hold lenders accountable for poorly underwritten loans is a significant protection for taxpayers. however, if lenders are unsure about the conditions under which they will be required to repurchase loans sold to the gses, they may shy away from originating loans to borrowers whose risk profiles indicate a higher likelihood of default. the federal housing finance agency launched an important initiative last year to clarify the liabilities associated with representations and warranties, but, so far, putback risk appears to still weigh on the mortgage market. mortgage servicing standards, particularly for delinquent loans, are more stringent than in the past due to settlement actions and consent orders. servicing rules recently released by the consumer financial protection bureau ( cfpb ) will extend many of these standards to all lenders. 12 these standards remedy past abuses and provide important protections to the october 2012 and april 2013 surveys are available on the federal reserve board ’ s website. these estimates are smaller than the estimates in the march 2013 mortgage bankers association speech because capacity constraints appear to have become less severe in recent months ( see duke, “ comments on housing and mortgage markets, ” in note 1 ). these estimates are for the period from february 2011 to february 2013. the march estimates were for the period from october 2010 to october 2012. see cfpb ( 2013 ), “ 2013 real estate settlement procedures act ( regulation x ) and truth in lending act ( regulation z ) mortgage servicing final rules, ” regulations