NHC’s Ethan Handelman, Vice President for Policy and Advocacy, has joined a growing number of voices in the housing community cautioning policymakers on the draft rules implementing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, particularly the new language on qualified residential mortgages (QRMs). Handelman spoke during a press conference in Washington where he and representatives from the Mortgage Bankers Association, the National Community Reinvestment Coalition, the Consumer Federation of America, and the Center for Responsible Lending provided regulators with an alternative viewpoint on how the draft QRM could make it harder for low- and moderate-income families to afford homes.
The draft QRM rule includes stiff requirements on borrowers to make a 20% down payment and have a low debt-to-income ratio. Mortgage loans that don’t meet these requirements would be subject to risk retention, potentially raising their cost. Of even more concern, the QRM rule is coming out ahead of broader mortgage finance reform and other rules implementing Dodd-Frank, and so may unintentionally become a focal point for future policy. That could result in low- and moderate-income homebuyers, particularly in communities of color, facing much higher costs and less access to affordable mortgages. Other portions of the QRM rule, such as the restrictions on unsustainable mortgage products like no-documentation loans and exploding ARMs, can be an effective part of the mortgage finance system.
Handelman had this to say about NHC’s role in the unusual alliance responding to the QRM: “The reason you're seeing these alignments is because all of the players in the space, including mortgage bankers and consumer advocates, recognize that an overly restrictive definition of QRM will exclude large numbers of responsible low- and moderate-income families from homeownership.” A part of NHC’s mission is to ensure affordable housing options for all Americans, so we take pride in our involvement in this group alliance, choosing to speak up about the potential harm this may cause to some families.
This issue goes beyond just those who are directly involved with housing. On Wednesday, June 1, Senator John Kerry wrote a letter to the secretary of the U.S. Department of Housing and several others charging them with the task of reconsidering the proposal associated with the Dodd-Frank Act. Kerry mentioned “that in states such as
, where property prices are above the national average, it’s unreasonable to expect that buyers can afford to put 20 percent toward the purchase price of a home.” This is an issue that needs support and action from all sides, including senators like Kerry—after all, it is an alliance effort. Massachusetts
For more information about this issue, see this article in American Banker with quotes from Ethan.