he National Association of Realtors (NAR) urged a U.S. House subcommittee to create a broadly defined Qualified Mortgage (QM) regulation.
By law, Congress must define a “qualified mortgage” that protects
consumers. The QM regulation is designed to ensure that lenders only
make loans to borrowers who have the ability to repay the loan.
If Congress narrowly defines a QM, it could threaten the burgeoning
housing recovery by denying creditworthy borrowers access to safe,
quality loan products, said NAR’s 2012 Vice President and Liaison to
Government Affairs Scott Louser in testimony yesterday before the U.S.
House Financial Services Subcommittee on Financial Institutions and
“Realtors are the leading advocate for housing issues and believe that
one of the greatest issues affecting the housing market is uncertainty
in the rules that govern housing finance,” Louser said. “The first step
to creating certainty in the housing finance system is to broadly define
QM so that it encompasses the vast majority of the safe, high-quality
lending being done today.”
In his testimony, Louser said that current underwriting standards have
already slowed the housing market recovery and narrowly defining a QM
could make it worse. It could also force more borrowers into the non-QM
market, which could threaten lenders and investors with steering or
ability-to-pay violations. That lending atmosphere could lead to
higher-cost mortgage loans for everyone.
“Creating a broad QM that establishes strong consumer protections,
promotes mortgage liquidity, incorporates important ability-to-repay
standards and offers lenders a safe harbor … benefits lenders, investors
and consumers,” said Louser.
Louser testified that another area of concern to Realtors is the
definition of points and fees in the QM provision, which limits the
total points and fees collected by lenders and their affiliates to 3
percent of the loan amount. He said this discriminates against real
estate and mortgage firms with affiliates involved in the transaction
and limits companies from offering full services to clients.
NAR urged Congress to pass H.R. 4323, the “Consumer Mortgage Choice
Act,” so that consumers can benefit from greater competition between
affiliated and unaffiliated mortgage lenders.