Several powerful real estate, home building, and mortgage banking groups have attacked the proposed qualified residential mortgage (QRM), claiming it would harm both creditworthy borrowers and a housing recovery.
The following statement was released by the Center for Responsible Lending, the Community Mortgage Banking Project, the Mortgage Bankers Association, the Mortgage Insurance Companies of America, the National Association of Home Builders and the National Association of Realtors late last week:
“In the midst of a very fragile housing recovery, the government is throwing a devastating, unnecessary and very expensive wrench into the American dream.”
“First time homebuyers will have to choose between higher rates today or a 9-14 year delay while they save up the necessary down payment. And 25 million current homeowners would be locked out of lower refinancing rates because they lack the required 25 percent equity in their homes.”
The groups believe the down payment and home equity requirements won’t have a “meaningful impact” on mortgage payment default rates, but rather will penalize responsible consumers and cause many to put off the purchase of a home.
Additionally, they argue that those unable to qualify for a QRM will be subjected to higher mortgage rates, making qualification and homeownership more difficult, if not impossible.
“We urge regulators to develop a final rule that encourages good lending and borrowing without punishing credit-worthy consumers,” the groups concluded.
In short, the proposed QRM will require a 20 percent down payment for purchase money mortgages and 25 percent equity for a refinance, effectively eliminating the need for private mortgage insurance, while putting pressure on home sales and mortgage financing.