Proposed QRM Harms Creditworthy Borrowers and Housing Recovery

The following organizations, along with NAR, prepared an in-depth analysis of the impact of the proposed QRM regulation:

  • Center for Responsible Lending,
  • Community Mortgage Banking Project,
  • Mortgage Bankers Association,
  • Mortgage Insurance Companies of America, and
  • National Association of Home Builders.

They developed the joint white paper in advance of the House Subcommittee on Capital Markets and Government Sponsored Enterprises hearing on the Qualified Residential Mortgage, which took place on April 14, 2011.

The executive summary of the white paper, entitled, “Proposed QRM Harms Creditworthy Borrowers and Housing Recovery,” is provided below, or the entire white paper is available for download as a PDF. The executive summary was also issued as a joint statement.

Executive Summary (and statement)
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.

High down payment and equity requirements will not have a meaningful impact on default rates. But they will require millions of consumers, who are at low risk of default, to either put off buying a home or pay unnecessarily high rates. The government is penalizing responsible consumers, making homeownership more expensive or simply out of reach for millions. We urge regulators to develop a final rule that encourages good lending and borrowing without punishing credit-worthy consumers.

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