The call for changes to the proposed 20 percent down payment rule being proposed under the Qualified Residential Mortgage (QRM) provision by federal regulators continues to grow louder as both housing industry advocates and members of Congress express their belief that the rule violates congressional intent when the Dodd-Frank Finance Reform Bill was passed.
A diverse coalition of 44 consumer organizations, civil rights groups, lenders, real estate professionals and insurers, along with 44 Senators and 282 members of the House of Representatives have voiced their concern that such a requirement would hurt, rather than help, a housing recovery.
Last week, Congressional supporters of the Qualified Residential Mortgage (QRM) provision, Senators Mary Landrieu (D-LA), Kay Hagan (D-NC) and Johnny Isakson (R-GA) and Congressmen John Campbell (R-CA) and Brad Sherman (D-CA), held a press conference urging regulators to follow the clear legislative intent behind the provision.
Congressional members note that at the time the Dodd-Frank legislation was being considered, they rejected a down payment requirement because it was determined that the cost of excluding responsible middle-class families would exceed the modest improvement in default rates.
The 44 organizations that make up the Coalition for Sensible Housing Policy, released a joint white paper which details how the proposed risk retention regulation would significantly harm creditworthy borrowers while frustrating the nation’s fragile housing recovery.
“I cannot remember a time when so many different organizations concerned about mortgage policy were in such strong agreement,” said Glen Corso Managing Director of the Community Mortgage Banking Project. “The message is clear – regulators should go back to the drawing board on the proposed QRM rule. Regulators should focus on good underwriting features, as outlined in the original statute, which are proven to reduce defaults.”
The comment period for rules regarding QRM has been extended until August 1, 2011. The coalition’s white paper, “Proposed Qualified Residential Mortgage Definition Harms Creditworthy Borrowers While Frustrating Housing Recovery,” can be viewed at http://www.communitymb.com.
If you wish to comment on the proposed risk retention rules you can do so on any of the following websites: Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, the U.S. Securities and Exchange Commission, the Federal Housing Finance Agency, and the Department of Housing and Urban Development.