In testimony before Congress, the National Association of Realtors blamed unnecessary federal regulations for preventing first time homebuyers from entering the current real estate market.
"Realtors support strong underwriting standards to protect consumers from the risky lending practices of the past, but we are concerned that the pendulum has swung too far," NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark., said. "In some cases, well-intentioned, but over-corrective policies are severely hampering the ability of millions of qualified buyers to purchase a home. I believe, and our members believe, that we have yet to strike the right balance between regulation and opportunity."
Polychron testified before the U.S. Senate's Committee on Banking, Housing and Urban Affairs on April 16
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The association said the regulatory overreach had helped drop the number of first time homeowners in the market to the lowest level it has had since 1987 and the nation's homeownership rate to the lowest level since 1990. This despite historically low interest rates that would normally foster home purchases, the NAR noted.
"No one wants to see a return to the unscrupulous, predatory lending practices that caused the Great Recession, but some modifications to existing regulations would help restore the homeownership rate to pre-bubble levels," Polychron said.
In his testimony, Polychron proposed adjustments to a range of regulations that would provide consumers with valuable protections and safe access to mortgage credit. He recommended changes to restrictive condominium polices from the FHA, along with Fannie Mae and Freddie Mac, which limit opportunities for buyers to own condos. Condos often represent the most affordable buying options for first-time homebuyers and minorities, the association said.
Polychron called on the CFPB to encourage more lending from responsible community financial institutions and also provide more flexibility for lending in small specialty markets such as rural communities.
He cautioned the CFPB to anticipate the potential for problems and issues to be uncovered during the implementation of the Real Estate Settlement and Procedures Act and Truth in Lending Act changes. The rule changes take effect on August 1, the busiest transaction time of the year. While NAR is supportive of the new harmonization, Polychron suggested a restrained approach to initial enforcement efforts by the CFPB.
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