The National Association of Mortgage Brokers (NAMB), the National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) are part of a coalition of lender, real estate agent, consumer and civil rights groups that has sent a letter to Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), urging 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," said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc. in Miami. "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.
In the letter, the trade groups said:
"[A]n unnecessarily narrow definition of QM that covers only a modest proportion of loan products and underwriting standards, and serves only a small proportion of borrowers, would undermine prospects for a housing recovery and threaten the redevelopment of a sound mortgage market."
"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," said 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."
The trade groups noted that Congress intended that all creditworthy borrowers—especially low- and moderate-income borrowers and families of color—should be extended the important protections of a QM.
"Creating a broad QM, which includes sound underwriting requirements, excludes risky loan features, and gives lenders and investors reasonable protection against undue litigation risk, will help ensure revival of the home lending market," said the letter.