However, in drafting the proposed rule, banking regulators said a QRM should require a 20 percent down payment — "a misinterpretation of the intent of the provision in the law that could needlessly slow the housing market’s recovery and price well-qualified Americans out of the market," they wrote.
Housing industry leaders have called on regulators to avoid specifying a downpayment requirement and, instead, weigh a borrower's ability to repay the loan in assessing risk.
If the proposed rule isn’t changed, borrowers who cannot reach the 20 percent threshold would wind up with loans that would be considered risky because they would not fall under the QRM requirement.
In addition, banks may decide to refrain from making loans outside the requirements, potentially keeping capable borrowers out of the housing market.
A final rule is expected from housing regulators sometime this year.