The National Association of Realtors Tuesday praised the final version of the federal regulation mandating qualified residential mortgage procedures under the Dodd Frank Financial Reform Act.
QM loans, first defined by the CFPB, establish the borrower's ability to pay during the underwriting process. The loans also enjoy a “safe harbor” from borrower litigation should the borrower sue the lender over a loan failure or foreclosure.
NAR praised the final rule for focusing on “sound underwriting” to help guarantee a loan's soundness instead of requiring large down payments.
“Importantly, the final rule relies on sound and responsible underwriting rather than on an onerous down payment requirement to qualify as a QRM loan,” the association wrote in an announcement about the change. “NAR strongly opposed earlier versions of the rule that included 20 and 30% down payment requirements, which would have denied millions of Americans access to the lowest cost and safest mortgages.”
CUNA and NAFCU also approved of the rule, noting that its approval harmonized the version of the rule developed by the federal financial regulators except for NCUA.
“CUNA has advocated strongly for the important step of aligning the Qualified Residential Mortgage with the existing Qualified Mortgage definition,” Mary Dunn, CUNA's deputy general counsel and senior vice president said. “Doing so encourages lenders to work with creditworthy borrowers to make home loans that will continue to drive the country and our economy forward.”
NAFCU also praised the rule but expressed caution about the rule's impact.
“NAFCU supports the interagency determination to align the final QRM rule with the definition of Qualified Mortgage under the CFPB. We believe that this will minimize unnecessary hurdles and obstacles for credit unions and other mortgage market participants,” Michael Coleman, director of regulatory affairs said. “However, we remain concerned about elements of both definitions and strongly encourage the agencies to reconsider the effects each would have on mortgage lending. We will continue to examine the impact of this rule on credit unions directly and as participants in the secondary mortgage lending market.”
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