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NAR Voices Approval of Revamped QRM

by devteam November 1st, 2013 | Share

The National Association of Realtors®rn(NAR) added its comments to those of other housing groups about a re-proposed definitionrnof qualified residential mortgages (QRM). rnSix federal regulatory agencies redrafted an earlier version in laternsummer to bring it into alignment with the qualified mortgage (QM) definitionrnalready finalized by the Consumer Financial Protection Bureau (CFPB).  The re-proposal is now in a period of publicrncomment.</p

In its letter submitted on Wednesday NAR applauded the regulators forrnsynchronizing the two definitions. Gary Thomas, NAR President said, “As thernleading advocate for housing issues, NAR believes that aligning the QRMrndefinition with the QM definition removes the risky product features and low-rnor no-documentation lending that led to increased defaults, without excludingrnthose buyers who are unable to afford a high down payment.”  </p

The regulators had also invited public comment on an alternative proposalrnwhich would require a 30 percent down payment from buyers.  NAR criticized it for being unduly narrow andrnunnecessary to assure safe and sound mortgage lending. “The demand for highrndown payments ignores strong evidence that responsible lending standards andrnensuring a borrower’s ability to repay have the greatest impact on reducingrnlender risk. The low foreclosure rate of Veterans Affairs loans, which have thernlowest down payment requirements and relatively low default rates, is furtherrnevidence that the key to safe lending is sound underwriting and documentation, ratherrnthan high down payments,” the letter said.</p

NAR said it was among the most vocal opponents of the first QRM rulernproposed in April 2011 because it included a 20 percent down paymentrnrequirement.  The rule preferred by thernorganization would have had no down payment requirement and reasonable creditrnand debt-to-income standards.  </p

The Realtor group said it supports the proposed rule’s treatment of therngovernment-sponsored enterprises (GSEs) while in conservatorship in which thernguaranty provided by the GSEs will satisfy the rule’s risk retentionrnrequirements.

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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