When banks aren’t approving mortgage loans and would-be homebuyers are denied access to credit, Realtors are among the first to know about it. In 2010, when cash-only sales and investors dominated the housing market because even buyers with superb credit histories and minimum down payments couldn’t qualify for mortgages, it was the Realtors who called on policy makers to take steps to loosen the tight credit environment.
That’s why Richard Cordray, the director of the Consumer Financial Protection Bureau, referred to Realtors as the “boots on the ground” last week when he joined me at NAR’s Capitol Hill office to brief reporters about the new mortgage lending rules that his agency implemented on January 10th.
The new Ability-to-Repay rules are meant to prevent the predatory lending practices that led to the foreclosure crisis; practices that Realtors® warned were very risky as early as 2005 when NAR produced consumer brochures that encouraged buyers to shop carefully for mortgages.
You can watch C-SPAN’s coverage of the briefing here.
Lenders are now required to make a good faith effort to determine whether a borrower will be able to repay the loan. The rules also include criteria for Qualified Mortgage loans that are considered low-risk and safe for borrowers.
These regulations will go a long way to protect consumers from receiving loans that may be inappropriate for them and gives them additional legal protections. NAR is supportive of these changes and we’ve provided input throughout the rulemaking process which started in 2010 after passage of the Dodd-Frank financial reform legislation.
Realtors sent comment letters to the agencies, attended public hearings, and provided testimony before Congress to ensure that any new lending rules would not be overly restrictive or inadvertently hold back the housing recovery instead of advancing it.
We’ve been at the forefront of this debate in Washington in much the same way that Realtors are on the front lines of the real estate market. That’s why Director Cordray called on Realtors to help monitor the impact that the new rules have on buyers’ access to credit as well as any negative changes to the transaction process. Realtors® will see some trends sooner than others and be able to answer key questions such as: Is the QM loan approval process taking too long?
Are sellers reluctant to accept offers from buyers who require financing? Are buyers satisfied with their choices of real estate services such as title and escrow companies? Are smaller lenders and credit unions still making loans?
It’s still too early to know how real estate transactions and the market will be impacted by the Ability-to-Repay and Qualified Mortgage rules, but Realtors are the voice of real estate and are ready to report on what they see in the field and know that regulators in Washington are prepared to listen.
The above blog post is the National Association of Realtors response to a HousingWire article that ran Jan. 9.