Will new mortgage regulations help or hurt buyers?

mortgage, QM, QRM, down paymentLast week, a new QRM (Qualified Residential Mortgage) proposal was issued by federal regulators, but headlines touting it as a victory are premature. This is not a time for complacency as the final rule is still uncertain. We are still looking into the potential impact to prospective homebuyers. No matter what, there will be many details important for agents and brokers to understand once the rulings are finalized.

QM (Qualified Mortgage) is already finalized and outlines the steps lenders are required to take to ensure a homebuyer’s ability to repay. QRM will address risk retention, requiring lenders to keep a certain percentage of mortgages on their books. Loans that meet the QRM definition will be exempt and can be sold in the secondary mortgage market.

Here’s the latest:

  • Six federal agencies issued a notice revising the QRM rule proposed in 2011 to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new proposal would define QRM to have the same meaning as QM (as defined by the Consumer Financial Protection Bureau).
  • The agencies also announced a second alternative for QRM that contradicts the first approach by maintaining the requirement for lenders to hold some of the credit risk if a loan is sold with less than a 30 percent down payment.
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The future of housing finance on horizon

home, home loan, mortgageHousing once again became a hot marketplace topic when President Obama laid out his plan for the future of housing finance last week. He urged Congress to take action on  housing legislation before year end.

As the market improves, there’s now focus on what should happen next to meet long term market needs. With a wide range of opinions on how much or how little government should be involved, we offer a few critical points to consider when forming your own opinion:

Government Sponsored Enterprises (GSEs)

The Fannie/Freddie model of private gains and public loses is obsolete. Will the huge dividends now being returned to the Federal coffers by the GSEs slow momentum for reform?

Limited government role

A limited government role in housing finance as a backstop and to leverage the deep, liquid credit markets Fannie Mae and Freddie Mac developed over several decades will keep borrowing costs from increasing, preserve the option of a 30-year fixed rate mortgage, and ensure responsible, creditworthy first-time homebuyers have the opportunity to buy a home.

Private market

Decrying the irresponsible lending practices that caused the unprecedented housing crash, and then declaring that all housing finance should rest entirely on the private market is contradictory. keep reading

MSN Real Estate highlights Down Payment Resource

In a recent piece about buying condos, MSN Real Estate highlights Down Payment Resource as a tool for buyers to discover homebuyer programs.  Here’s an excerpt from the piece:

Looking for down payment assistance?
There are many ways for first-time buyers to find money to help with their down payment. One smart way is to turn to nonprofit housing counselors approved by the Department of Housing and Urban Development who can find this money for you and make sure you’re mortgage-ready.

But there are also a number of free online tools that offer help. Here, it’s best to tread carefully, lest your information be shared or your identity stolen by scam artists.

At least one, Downpaymentresource.com, says it does not sell information about its visitors to third parties. You can print out the information on programs and leave no footprint, unless you decide to email the results to yourself, in which case you opt in to its newsletter.

Read the full story with even more about Down Payment Resource at MSN Real Estate. keep reading