Mortgage industry urges revision to QRMs
Several consumer and trade groups urged regulators Wednesday to revise their standards for a qualified residential mortgage so as not to lock out creditworthy borrowers. The Center for Responsible Lending, the Community Mortgage Banking Project, the Mortgage Bankers Association, the Mortgage Insurance Companies of America, the National Association of Home Builders and the National Association of Realtors issued a statement in lieu of the House subcommittee meeting Thursday to discuss the QRM proposal. Federal regulators recently provided a narrow definition of the QRM, and also voted in favor of an exemption rule set at 20% down payment. A qualified residential mortgage is one with a maximum 80% LTV, on a property that is owner-occupied and has a 30-year amortization period with full documentation. A borrower must have a track record clear of 60-day delinquencies. This excludes interest-only loans and loans with premium penalties. The organizations that made the collective statement Wednesday compiled a whitepaper on the issue. They found that, based on 2009 income and home price data, it would take armors nine years for the typical American family to save enough money for a 10% down payment and fully 14 years to save for a 205% down payment. (Click to expand) In addition, the groups found that the proposed equity requirements under the QRM standard would inhibit 24.8 million homeowners from refinancing. And that simply is not fair, they said. "High down payment and equity requirements will not have meaningful impact on default rates," the groups said. "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," they said. The House Subcommittee on Capital Markets and Government Sponsored Enterprises scheduled for a hearing on the qualified residential mortgage Thursday. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.