The National Association of Realtors®
(NAR) added its comments to those of other housing groups about a re-proposed definition
of qualified residential mortgages (QRM).
Six federal regulatory agencies redrafted an earlier version in late
summer to bring it into alignment with the qualified mortgage (QM) definition
already finalized by the Consumer Financial Protection Bureau (CFPB). The re-proposal is now in a period of public
In its letter submitted on Wednesday NAR applauded the regulators for
synchronizing the two definitions. Gary Thomas, NAR President said, "As the
leading advocate for housing issues, NAR believes that aligning the QRM
definition with the QM definition removes the risky product features and low-
or no-documentation lending that led to increased defaults, without excluding
those buyers who are unable to afford a high down payment."
The regulators had also invited public comment on an alternative proposal
which would require a 30 percent down payment from buyers. NAR criticized it for being unduly narrow and
unnecessary to assure safe and sound mortgage lending. "The demand for high
down payments ignores strong evidence that responsible lending standards and
ensuring a borrower's ability to repay have the greatest impact on reducing
lender risk. The low foreclosure rate of Veterans Affairs loans, which have the
lowest down payment requirements and relatively low default rates, is further
evidence that the key to safe lending is sound underwriting and documentation, rather
than high down payments," the letter said.
NAR said it was among the most vocal opponents of the first QRM rule
proposed in April 2011 because it included a 20 percent down payment
requirement. The rule preferred by the
organization would have had no down payment requirement and reasonable credit
and debt-to-income standards.
The Realtor group said it supports the proposed rule's treatment of the
government-sponsored enterprises (GSEs) while in conservatorship in which the
guaranty provided by the GSEs will satisfy the rule's risk retention