Why Realtors oppose changes to QRMs
There is much talk in the news about Qualified Residential Mortgages (QRM) and Qualified Mortgages (QM) and possible changes being considered at the federal level. But what exactly are QRMs and QMs?
A QM is a loan that requires the borrower to make little or no down payment. Types of QMs include USDA rural loans, FHA loans and 5-percent-down conventional loans.
A QRM is a loan that requires more personal investment on the front end when obtaining the loan. Types of QRMs include loans that require 20 percent-plus down payments.
Since being proposed, Realtors have opposed such a significant down payment requirement, as it would prevent many consumers with good credit from purchasing a home. Luckily for our industry, that requirement – and all requirements related to down payments – has been removed. The new QRM rules being proposed replace the down payment feature with a mechanism that can be viewed as a safety valve for lenders, but also a helpful safeguard to overheating the economy.
Following is a statement by National Association of Realtors President Gary Thomas regarding current consideration in Congress over the Qualified Residential Mortgage. Realtors at the local, state and national level have been hard at work on this issue, which affects all homeowners.
“The reproposed Qualified Residential Mortgage rule announced this morning is a victory for homebuyers and the future of homeownership in this country. This version of the QRM rule will give creditworthy buyers access to safe and affordable loan products without overly burdensome down payment requirements.
“The new standards, which align with those applied to Qualified Mortgages, are stringent enough to protect consumers from unscrupulous lending practices while also creating new opportunities for private capital to reestablish itself as part of a robust and competitive mortgage market.
“Realtors were among the most vocal opponents of the first QRM rule proposed in April 2011 because it would have denied millions of creditworthy Americans access to the lowest-cost and safest mortgages. We applaud the regulators for removing the 20 percent down payment requirement and for adopting reasonable credit and debt-to-income standards.
n addition to the main proposal that we support today, regulators introduced an unfavorable alternative that would require buyers to put 30 percent down to qualify for a QRM loan, a restrictive measure that dramatically favors the wealthy. Research shows that it would take the average American more than 25 years to save enough money to buy a modest home with a 30 percent down payment.
“Realtors will continue to oppose any regulation that requires unreasonably high down payments from consumers. We are committed to working on behalf of America’s hardworking families to ensure that anyone who is able and willing to assume the responsibilities of owning a home has the opportunity to pursue that dream, now and into the future.”
As Congress reconvenes after the summer break, there is much to be considered on this topic. And Realtors across the country are hard at work to make sure that all consumers have access to affordable loans. For more information and analysis of the QRM rule, visit the Qualifi ed Residential Mortgage and Risk Retention topic page on realtor.org.
The Greater Chattanooga Association of Realtors, a regional organization with more than 1,400 members, is one of more than 1,800 local boards and associations of Realtors nationwide that comprise the National Association of Realtors. The Greater Chattanooga Association of Realtors services Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade and Walker counties in northwest Georgia. For more information visit gcar.net.