Housing industry leaders express optimism for revamped risk-retention rule

"As a result, it will help the economy and ensure the largest number of creditworthy borrowers are able to access safe, quality loan products at competitive prices."

The industry had mounted an aggressive campaign against the down payment measure.

Gary Thomas, president of the National Association of Realtors, said his group is pleased that regulators removed the 20 percent downpayment requirement and installed "reasonable credit and debt-to-income standards."


"This version of the QRM rule will give creditworthy buyers access to safe and affordable loan products without overly burdensome downpayment requirements," Thomas said.

"The new standards, which align with those applied to qualified mortgages, are stringent enough to protect consumers from unscrupulous lending practices while also creating new opportunities for private capital to reestablish itself as part of a robust and competitive mortgage market."

Richard Hunt, president and CEO of the Consumer Bankers Association, said aligning the QM and QRM rules "will help reduce the cost of credit and make it more readily available to home buyers."

While generally supportive of regulators' favored proposal, industry officials balked at an alternative that would add a 30 percent down payment or equity requirement to qualify for a QRM loan.

They argue that the housing crisis was not caused by high loan-to-value lending but by pervasive shoddy underwriting and risky loan products.

"That would have a chilling effect, especially for first time home buyers,” Thomas said. “It would mean fewer homeowners would be able to qualify.”


Thomas and other industry officials said the down payment provision could stunt the housing market’s fragile growth, potentially pushing the economy in the direction of another recession.

“We will comment on the 30 percent provision. Believe me.” Thomas said.

David Stevens, president and CEO of the Mortgage Bankers Association (MBA), said that "such steep down payment requirements are unnecessary to accomplish the purposes of the QRM standard and would severely impair access to credit for all but the most well-heeled borrowers."

While there was general agreement for aligning the QM and QRM rules, credit unions remain concerned that their lending won't be met.

Carrie Hunt, senior vice president of government affairs and general counsel, National Association of Federal Credit Unions (NAFCU), expressed concern that while this second proposal is an improvement "we believe it will still have a negative downstream effect on credit unions."

"We will thoroughly study the proposal and work with the FHFA and the other agencies to provide relief for credit unions from the rule’s effect on their mortgage lending," Hunt said. 

Overall, the industry said the re-proposed rule is a reflection of how well the notice and comment process can work.

Chris Estes, president and CEO of the National Housing Conference said “this new proposal shows that regulators listened to the comments from the wide range of stakeholders involved.”

Stevens said that it is clear that "regulators recognized the implications for consumers and the broad mortgage markets, and decided to alter and then re-propose a much better rule." 

"The QM standard already clearly stipulates what is considered to be a safe and sound loan," he said. 

"Adding additional layers of regulation would have contracted credit for first-time home buyers and borrowers without large down payments, and prevented private capital from entering the market," he said.