RISMEDIA, April 7, 2011—The National Association of Hispanic Real Estate Professionals (NAHREP) has recently raised concerns about the proposed regulation by Federal financial regulators that would require a minimum 20 percent down payment for “qualified residential mortgages” (QRMs) that are exempt from mortgage-backed securities risk-retention rules. The 18,000-member trade association said the very narrow QRM definition would adversely impact minority and first-time home buyers’ ability to get affordable mortgage financing.
“By mandating a 20 percent down payment on qualified residential mortgages, we are concerned that this regulation as proposed will have a negative impact on the ability of minority and first-time homebuyers to obtain an affordable mortgage to buy a home. Government policy should not put minority and first-time home buyers in a position where they are once again vulnerable to predatory lending practices and forced into high cost mortgages,” said NAHREP Chairman Carmen Mercado.
The definition of QRM is important because it will determine the types of mortgages that will be offered at a lower cost to a consumer. NAHREP supports the overall goal of the QRM and the regulatory agency’s effort to create a strong underwriting framework that promotes responsible lending and borrowing.
Narrow underwriting guidelines for “prime” loans created the opportunity for the proliferation of “subprime” lending. If the right balance around QRM definition isn’t reached, regulations will create a similar scenario for non-QRM lending, the group maintains. Data released this week by the Federal Housing Finance Agency estimated that only 30% of the mortgages originated in 2009 and purchased by Fannie Mae and Freddie Mac would have qualified for QRM treatment.
“A government regulation that categorizes 70 percent of borrowers as subprime is just wrong and bad policy,” Mercado added.
The National Association of Hispanic Real Estate Professionals, a non-profit 501c6 trade association, is dedicated to increasing the homeownership rate among Latinos by educating and empowering the real estate professionals that serve them. Based in San Diego, NAHREP is the premier trade organization for Hispanics and has more than 18,000 members in 48 states and 50 affiliate chapters.