QRM Requirements Could Stifle Recovery

According to data from CoreLogic, about 39% of borrowers who purchased a home in 2010 were completed with a down payment less than the 20% down payment that would be required by the proposed Qualified Residential Mortgage (QRM) risk retention rule.


Reported by HousingWire, the data suggests that the 20% down payment requirement will lead to more sluggish sales in the short-term.

The proposed rule would require lenders to maintain 5% of the credit risk on loan they produce that do not meet the QRM standard.  That would suggest that home loans that do not qualify as a QRM would see potentially prohibitively higher costs than QRM qualifying loans.

There has been calls by industry groups and government officials, including FHA Acting Secretary Bob Ryan to lower the QRM standard to 10%.  However, the CoreLogic data indicated that would still mean that 25% of home purchases in 2010 would not have qualified as a QRM.

Fifteen trade groups joined forces to send a letter to regulators asking that the risk retention rule be delayed until it impacts can be studied further.  The comment period for the new rule is scheduled to end on June 10.

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