The American Credit Union Mortgage Association has urged federal regulators to relax some of their proposed rules on what it will take to get a qualified residential mortgages.
Qualified residential mortgages, or QRMs, are those which issuers of mortgage-backed securities will not have to retain 5% of their value if they are included in those securities.
Analysts expect QRMs could become the “conforming mortgages” in a reformed secondary mortgage market.
ACUMA wrote in particular about the current rule's requirement that QRM mortgages require a minimum 20% down payment.
“While the agencies assert that borrowers who have invested less than a 20% down payment, and do not also have cash to close, are more likely to default, ACUMA and its members can relate countless instances in which a full analysis of a family’s financial circumstances indicates that the family can successfully repay a mortgage loan with a much more manageable down payment (e.g., 10%, or 5%), along with the support of strong, expert underwriting and of mortgage insurance,” ACUMA wrote.
“As mentioned above, credit unions (and many of their mortgage borrowers) emerged from the subprime mortgage crisis relatively unscathed, compared to many of their mortgage lending competitors,” the association added.
“The reason they survived is that they maintained their dedication to their members and their communities, and to originating good mortgage loans that they reasonably determined their borrowers had the capacity and willingness to repay. Many of those loans did not require their borrowers to place an ungainly 20% down payment (plus bring cash for closing costs), or insist on strict DTI ratios while ignoring other positive repayment indicators,” the letter said.