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Fight continues against 20% down payments

TALLAHASSEE, Fla. – July 7, 2011 – Florida Sen. Marco Rubio released a strong letter against proposed Qualified Residential Mortgage (QRM) and Qualified Mortgage (QM) rules, and sent it to major players in the discussion, including The Federal Reserve, The Federal Deposit Insurance Corporation (FDIC), Department of the Treasury, Comptroller of the Currency, U.S. Department of Housing and Urban Development, Securities and Exchange Commission, and Federal Housing Finance Agency.

The U.S. must tighten mortgage-lending rules to make the industry less risky – a new rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act. If a mortgage follows QRM rules, which have not yet been defined, lenders can sell the mortgage because it will be considered relatively low risk. Lenders can still issue mortgages that don’t adhere to QRM standards, but the law forces them to retain some ownership and part of the risk. As a result, most lenders will follow QRM rules once established.

In his letter, Rubio says he hears from “scores of constituents every day who are suffering under the weight of Washington’s regulatory agenda.” He takes exception to various parts of the Act and lender mortgage requirements, but specifically criticizes the possibility of a 20 percent down payment requirement for a mortgage loan.

“As you know, Florida’s economy continues to struggle with a battered housing market and an unemployment rate well above the national average,” the letter states. “It is my belief that the draft rule contains an overly narrow definition of QRMs … Unless broadened, the rules will almost certainly raise the cost of homeownership and restrict access to credit. These negative effects would come at precisely the wrong time for Florida’s housing market.”

Rubio also states a concern that the changes will make the housing market more dependent on the federal government, since the QRM and QM rules won’t apply to government-backed enterprises Fannie Mae and Freddie Mac.

National Association of Realtors response

NAR has consistently opposed tighter lending standards that will block some buyers from homeownership.

“Achieving the dream of homeownership will become increasingly difficult for buyers if they are required to make a 20 percent down payment, which may be a reality for many of tomorrow’s buyers if a proposed Qualified Residential Mortgage rule is adopted,” says NAR President Ron Phipps. “That is why Realtors are strongly urging regulators to go back to the drawing board on the proposed rule.”

During the regular 2011 session of the Florida Legislature, lawmakers also sent a message to Washington that a mandatory 20 percent down payment would harm the

Florida housing market. To recognize the Legislature’s support, NAR is running an ad in the July 8 edition of the Tallahassee Democrat thanking Florida lawmakers.

The ad will also help educate the public about the issue and include a web address to learn more.


© 2011 Florida Realtors®

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