A narrow definition of the Ability to Repay regulation under the Dodd-Frank Act could harm consumers and the housing market recovery, according to the National Association of REALTORS®.
In a letter sent early this week to Richard Cordray, director of the Consumer Financial Protection Bureau, NAR joined a broad coalition of lenders, investors, housing professionals, consumer advocates and civil rights groups to urge for a broadly defined Qualified Mortgage (QM) that covers a wide range of traditionally safe products and underwriting criteria.
"As the leading advocate for housing and homeownership, NAR supports a QM definition that establishes strong consumer protections, but promotes mortgage liquidity and affordability so that a wide range of creditworthy consumers will be able to find mortgage financing," said NAR President Moe Veissi. "A narrow QM would certainly harm consumers by increasing borrowing costs and further restricting already tight lending conditions, which could curtail the country's fragile real estate and economic recoveries."
NAR believes that Congress intended for a broadly defined QM that establishes strong consumer protection against risky loan products, promotes mortgage liquidity in the market, incorporates important ability-to-repay standards, and offers lenders reduced litigation exposure. NAR is concerned that a narrow QM would force borrowers into a non-QM market where they would be burdened with significantly higher mortgage rates and fees or even be denied access to credit.
"A narrow QM definition that tracks closer with the related and widely opposed Qualified Residential Mortgage definition would deny millions of qualified, creditworthy consumers access to an affordable mortgage or perhaps any mortgage," said Veissi.
Local REALTOR® officials agree a narrow QM regulation would hurt all borrowers. Speaking on behalf of the Silicon Valley Association of REALTORS®, president Suzanne Yost said, "We need to ensure that creditworthy buyers have access to credit. While well-intentioned, we are concerned that the rules could have unintended consequences that could further restrict lending and curtail more people to buy homes at a time when demand is rising and the housing market is stabilizing."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.