The National Association of Mortgage Brokers (NAMB) has announced that it has submitted a comment letter to regarding the proposed amendments to Regulation Z, related to credit risk retention and qualified residential mortgage (QRM) requirements under the Dodd-Frank Wall Street Reform & Consumer Protection Act.
While the nationwide trade association supports the purpose and intent of the risk retention and QRM requirements in the proposed rule, in its comment letter, NAMB expresses its concerns that these requirements will have on the availability and affordability of housing finance for American homebuyers. NAMB is specifically concerned that the QRM will become the industry standard, and slow down mortgage lending and reduce or eliminate access to credit for many of the nation’s creditworthy borrowers.
“Any further unnecessary or unreasonable constraint on borrowers’ ability to obtain the financing they need to purchase or refinance their home will continue to perpetuate declining home prices and subvert the progress that is being made in other areas toward an economic recovery,” said NAMB President Michael J. D’Alonzo, CMC. “Recent regulations require significantly more documentation and verification of all borrower information, and there are fewer lenders serving communities than in previous years. This is particularly true in smaller communities and low- to moderate-income areas.”
Particular areas where NAMB believes the risk retention/QRM definition will impair American homebuyers from obtaining housing finance include:
►The borrower cannot be 30 days past due on any debt obligation and cannot have been 60 or more days past due on any debt obligation in the preceding 24 months;
►The borrower must not, within the preceding 36 months, have been a debtor in a bankruptcy proceeding, had a property repossessed or foreclosed upon, engaged in a short sale or deed-in-lieu of foreclosure, or have been subject to federal or state judgment for collection of any unpaid debt;
►The borrower must provide a 20 percent downpayment for a purchase transaction, and private mortgage insurance cannot be used to support the down payment;
►The mortgage must have maximum front-end and back-end debt-to-income ratios of 28 percent and 36 percent respectively;
►The mortgage must have a maximum loan-to-value ratio of 80 percent in a purchase transaction, 75 percent on a refinance, and 70 percent in a cash-out refinance situation.
“The market has already cleansed itself of virtually all of the toxic mortgage products that were the true underlying cause of our mortgage crisis, so placing unreasonably narrow restrictions on those mortgage products that remain available threatens to further depress our mortgage and housing markets and severely curtail our larger economic recovery,” said D’Alonzo. “Although NAMB supports the underlying purpose and intent of the proposed rule, we strongly believe that the agencies should carefully examine the likely adverse effects that this proposal will have, when finalized, on our market and on the very consumers the Dodd-Frank Act was enacted to protect.”
The NAMB comment letter was addressed to the Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), Federal Reserve Board (FRB), Office of the Comptroller of the Currency (OCC), Securities & Exchange Commission (SEC), and the U.S. Department of Housing & Urban Development (HUD).
NAMB is hosting a Federal Legislative Update Webinar on Thursday, Aug. 11 at 7:00 p.m. EDT and Friday, August 12 at 11:00 a.m. EDT featuring Mike Anderson, CRMS, NAMB Vice President and Goverment Affairs Chair, to discuss the latest legislative happenings including: QRM vs. QM, Loan Origniation Compensation Update, the Consumer Financial Protections Bureau and the disclosure simplification process and U.S. Rep. Gary Miller's GSE Reform bill.
