A narrow definition of the impending Ability to Repay regulation could harm consumers and the housing market recovery, according to the National Association of REALTORS®.
In a recent letter sent 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,” says 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.
“It’s critical for homeowners and the housing recovery that there be a balance between inadvertently exposing consumers to risky mortgages and unduly restricting liquidity and denying or delaying creditworthy borrowers from achieving the dream of sustainable homeownership,” says Veissi. “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.”
For more information, visit www.realtor.org.