Recently, the National Association of Realtors has expressed its fierce opposition to a new rule proposed by federal regulators that would seek to define qualified residential mortgages under the Dodd-Frank Wall Street Reform and Consumer Protection Act. NAR claims that this rule would prevent many potential homebuyers from attaining mortgages.
Proposals seek to impose a 20 percent minimum down payment requirement on QRMs.
"As the leading advocate for housing and home ownership, NAR firmly believes Congress intended to create a broad QRM exemption - strong evidence shows that responsible lending standards and ensuring a borrower's ability to repay have the greatest impact on reducing lender risk, and not high down payments," said NAR president Ron Phipps.
Down payments are often the largest obstacle for potential homebuyers, Phipps relayed. By increasing the necessary amount needed up front, many buyers will be unable to afford this, and could turn to the Federal Housing Administration as a result. With a greater volume of consumers utilizing the FHA, the costs for these potential borrowers will be greater because interest rates and fees will climb. As a result, many previously eligible borrowers would then be priced out of the market.
With the real estate market progressing in many regions nationwide, having a majority of consumers priced out of the market could quickly halt any of these improvements. Thus, NAR is seeking to eliminate this rule in order to make sure the market continues moving forward.