Toll Brothers CEO calls new mortgage rules dumb

“3% down doesn’t make any sense”

Not every builder is on board with federal regulators’ move this week to open the credit box and ease mortgage-qualification standards. While other builders like PulteGroup (PHM) and Ryland Group (RYL) welcome the new rules, an article in The Wall Street Journal stated that Luxury homebuilder Toll Brothers (TOL) finds the rule dumb.    

In PulteGroup’s third-quarter earnings report, Richard Dugas, Jr., chairman, president and CEO of PulteGroup said, “We are encouraged by proposed changes at FHFA which have the potential to improve mortgage availability, particularly for first-time homebuyers.”

Similarly, Larry Nicholson, CEO of Ryland Group, said:

“I don’t think anybody is a proponent for going back to what happened in 2006 or 2007 at all, but a little common sense goes a long way. I do think it helps the entry-level buyer with the 97% (loan-to-value) program. I think that will get some people off the fence.”

And then there’s Toll Brothers CEO and Founder Robert Toll”

During remarks at a Urban Land Institute conference in New York on Wednesday. He called the proposed loosening of credit standards “a really dumb-ass idea.”

“Yeah, we have a slow recovery, but it appears to be going to continue,” Mr. Toll said, adding, “Why do we want to go do what got us into this problem in the first place? … Three percent down doesn’t make any sense.”

Mr. Toll concluded that lenders have required a 20% down payment on top-rated mortgages for decades “and we had a hell of a housing program.”

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