Homeownership may have just gotten easier with the finalization of a new mortgage lending rule, according to the National Association of Realtors.
A happy homeowner makes for a happy real estate agent, and thanks to the finalization of the Qualified Residential Mortgage rule, there could be a lot of smiling faces in the days ahead, according to the National Association of Realtors.
On behalf of NAR, Steve Brown, the real estate trade association's president, applauded the Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau for finalizing the QRM rule, which supporters believe will help make homeownership easier for buyers to achieve without unduly increasing risk for mortgage service providers.
"Realtors are confident that the new QRM rule will encourage sound and financially prudent mortgage financing by lenders while also ensuring responsible homebuyers have access to safe and affordable credit," said Brown. "The synchronization with the QM rule will provide lenders with much needed clarity and consistency as they apply the new standards to loan applications while also providing a framework to bring more competition to the secondary mortgage market."
He added that one of the best aspects of the rule is that instead of requiring prospective homeowners to come up with a down payment in order to qualify for a QRM, it relies on "sound and responsible underwriting" instead.
NAR urged reform through formation of Coalition for Sensible Housing Policy
Prior to to the rule being amended, it was suggested that borrowers be required to put 20 to 30 percent of a house's cost as a down payment, which the NAR opposed. In an effort to inform the government of NAR's disapproval, the country's largest trade association assembled an alliance of organizations, all having the same stance in opposition to the down payment mandate. The 50 consumer groups formed the Coalition for Sensible Housing Policy partnership.
"We look forward to working with regulators and industry stakeholders on the implementation of the new risk-retention standards," said Brown.
Richard Cordray, CFPB director, noted in a press release that the new QRM rules effectively balance the best of both worlds for lenders and consumers. Those interested in a mortgage will be protected from debt traps and runarounds, while providing assurances to lending companies that borrowers will be able to pay back what they owe upon qualifying for the Ability-to-Repay rule.
Real estate agents, lenders and consumers can expect the new rule adjustments to go into effect upon publication in the Federal Register. Industry experts supportive of the rule may argue that its implementation can't come soon enough, as new data from NAR says that overly stringent credit standards may have contributed to the notable decline in first-time home buyers this year.