Proposed revisions to the qualified residential mortgage rule announced today will help millions of people buy homes and strengthen the mortgage market, says NAR President Gary Thomas.”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,” Thomas said in a statement released by NAR.
“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,” Thomas added.
The new plan would require banks to retain a piece of mortgages when borrowers spend more than 43 percent of their monthly income to repay the debt, according to a report by Bloomberg News. The previous proposal would have required banks to retain some of the debt when borrowers were spending more than 36 percent of their income on all loan payments and in loans with down payments of less than 20 percent, Bloomberg reported.
In July, NAR had another big victory, this one related to the qualified mortgage, or QM, standards. Under the Federal Reserve’s final rule, part of the Fed’s implementation of the BASEL III capital standards, banks will not have the overly stringent capital requirements that were first proposed. NAR had argued that bank capital requirements shouldn’t be predicated on the down payment amount. It was exotic loans, not low down payments, that contributed to the financial crisis, NAR argued. In the end, NAR’s position won out.