Qualified Residential Mortgage Victory!

Qualified Residential Mortgages will not require lenders to retain 5 percent of the credit risk. This will provide creditworthy buyers with access to safe and affordable loans without heavy down payment requirements.

  • The finalized Qualified Residential Mortgage (QRM) rule is a victory for homebuyers and the future of homeownership in the U.S. This rule provides creditworthy buyers with access to safe and affordable loan products without overly burdensome down payment requirements.
    • The new standards, which align with those applied to Qualified Mortgages, are stringent enough to protect investors from unscrupulous securitization practices while also creating new opportunities for private capital to reestablish itself as part of a robust and competitive mortgage market.
    • The final rule creates strong incentives for responsible lending and borrowing and discourages excessive risk taking in the secondary mortgage market which was a free for all before the housing crash.
  • Finalizing the QRM rule provides the certainty of a regulatory framework for securitiziation, which will be even more important as private capital issues a larger number of securities. 
    • By outlining the rules of the road for lenders and investors in the housing finance industry, the QRM rule should give private investors the confidence to participate more broadly in the secondary mortgage market.
  • The synchronization of QRM and QM streamlines the mortgage market for everyone involved.
    • Consumers, protected by QM’s Ability-Repay-Rule, benefit from lender confidence in the quality of the QM loan. Lenders, in turn, benefit from investor confidence in the QRM/QM loan.
  • If this QRM rule was in place a decade ago, consumers and taxpayers would have been protected from risky behaviors by lenders and securitizers.
    • Realtors® were among the most vocal opponents of the originally-proposed QRM rule because it included a 20% downpayment requirement that would have denied millions of creditworthy Americans access to the lowest cost and safest mortgage.
    • Saving the necessary down payment has always been the principal obstacle for first-time home buyers. Strong evidence shows that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk, and not high downpayments.
    • The new QRM rule honors congressional intent by including a wide variety of traditionally safe, well underwritten and documented products that have historically demonstrated low risks of default.
    • U.S. Senators Johnny Isakson, R-Ga., Kay Hagan, D-N.C., and Mary Landrieu, D-La., were strong supporters of this QRM rule. NAR thanks them for their work to craft an effective QRM rule that supports middle-class families and the housing recovery.
  • Realtors® are committed to working on behalf of America’s hardworking families to ensure that anyone who is able and willing to assume the responsibilities of owning a home has the opportunity to pursue that dream, now and into the future.

For more information on this topic, visit http://www.realtor.org/topics/qualified-residential-mortgage-and-risk-retention

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