The House Financial Services
subcommittee on Financial Institutions and Consumer Credit held a hearing on
Wednesday entitled "The Impact of Dodd-Frank's Home Mortgage Reforms: Consumer and Market Perspectives." Scheduled to speak at the hearing were representatives
of the National Association of Home Builders (NAHB), the Manufactured Housing
Institute (MHI), National Association of Mortgage Brokers, National Consumer
Law Center, the Securities Industry and Financial Markets Association (SIFMA), Center
for Responsible Lending, the National Association of Realtors® (NAR), and the Mortgage
Bankers Association (MBA).
NAHB First vice Chairman Rick Judson
told the committee members that proposed lending reforms under the Dodd-Frank Act
must be structured so as to cause minimum disruption to the mortgage markets
while ensuring consumer protections.
"NAHB urges the Consumer Financial Protection
Bureau (CFPB) and policymakers to consider the long-term ramifications of these
rules on the market, and not to place unnecessary restrictions on the housing
market based solely on today's economic conditions. Overly restrictive rules
will prevent willing, creditworthy borrowers from entering the housing market,"
Even with QM broadly defined, the flow of credit could be restrained if lenders
face a high risk of legal challenges to their loan decisions. Therefore Judson said NAHB supports a QM safe
harbor definition that would provide more assurance to lenders that they will
not be subject to increased litigation if they use sound underwriting criteria.
The safe harbor should incorporate specific ability-to-repay standards.
NAR's Vice President and Liaison to
Government Affairs Scott Louser also urged Congress and the Administration to
develop a broadly-defined QM regulation.
"Creating a broad QM that establishes strong consumer protections,
promotes mortgage liquidity, incorporates important ability-to-repay standards,
and offers lenders a safe harbor that reduces litigation exposure benefits
lenders, investors and consumers will help ensure the revival of the home
Louser testified that another area
of concern is a provision in the QM which limits the total points and fees
collected by lenders and their affiliates to 3 percent of the loan amount. This discriminates against real estate and mortgage
firms with affiliates involved in the transaction and limits companies from
offering full services to clients. NAR urges Congress to pass H.R. 4323, the
"Consumer Mortgage Choice Act", so that consumers can fully benefit
from greater competition between affiliated and unaffiliated mortgage lenders.