Home > Blogs > Florida > Orange County > Orlando > The Case Against the Proposed QRM Rule

Cindy Elkhander's Blog

By Cindy Elkhander | Broker in Orlando, FL

The Case Against the Proposed QRM Rule

In case you didn't know it, this time next year (unless something changes) getting a mortgage will be even MORE challenging.
QRM, Qualified Residential Mortgage Guidelines: Required 20% Down Payment.

* Down-Payment Requirement Not Necessary for Credit-worthy Borrowers: An increase in the down payment requirement from 5% to 20% would lower default rates by only three-fourths of one percentage point based upon historical loan performance data (2002-2008).
* Down-Payment Requirements Put Homeownership Out of Reach for Credit-worthy Borrowers. The proposed 20% down payment requirement will exclude responsible low and moderate income borrowers from stable, consumer-friendly mortgages at affordable interest rates.
* Down Payment Requirements Jeopardize the Nation's Economic Recovery. Existing homeowners, who have suffered declines in the value of their homes in the past few years are about to get walloped again and denied access to the best products and the lowest cost credit when they attempt to refinance their existing mortgages if this proposed rule remains unchanged
* Congress rejected down payment requirements - The proposed QRM regulations are contrary to clearly expressed Congressional intent. The QRM sponsors, Senators Landrieu, Hagan and Isakson, have repeatedly told the regulators their intent was a broad, inclusive QRM standard that would encourage sound underwriting and consumer-friendly loans and not exclude large number of credit-worthy borrowers.
* Regulators have offered no data to support the QRM. The QRM regulations are supposed to be based upon "historical loan performance data" and designed to incorporate features and underwriting standards the produce lower rates of default
* Good underwriting is the best way to prevent defaults.
* The proposed debt-to-income ratios of 28/36 are outmoded, extremely restrictive in this tight economy and unnecessary for preventing defaults.
Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer