By Robert Freedman, Senior Editor, REALTOR® Magazine
There’s still a long way to go for NAR and the 44 other organizations in a coalition to get banking regulators to rethink their controversial qualified residential mortgage (QRM) rule, but a press conference held on Wednesday in a Senate hearing room shows how well lawmakers can work together when the issue is strongly bi-partisan, as home ownership issues are.
At that press conference, Sen. Johnny Isakson (R-Ga.) and Sen. Kay Hagan (D-N.C.) joined Rep. John Campbell (R-Calif.) and Rep. Brad Sherman (D-Calif.) to make a forceful call to banking regulators to go back to the drawing board on QRM. It’s not that the proposed rule is completely off the mark; it takes important steps toward strengthening underwriting requirements so lenders don’t make the same mistakes they made during the housing boom. But they need to go back to the drawing board on the proposed requirement that borrowers make a down payment of at least 20 percent to get the most affordable financing available for borrowers with solid credit.
As Sen. Isakson said at the press conference, it was legislators’ intent to require sound underwriting standards for borrowers, not a minimum downpayment requirement. “We recognized we had an underwriting problem, not a downpayment problem,” he said.
Thanks in large measure to concerns raised by the public, members of the coalition to get the rule changed, and a strong response by REALTORS® to a Call for Action NAR issued earlier in the month, banking regulators delayed the public comment deadline on their proposal until early August. That suggests that word of everyone’s concern is getting through to regulators.
The delay provides breathing space to continue making the case against the downpayment requirement, but it was especially reassuring to see lawmakers from across the aisle coming together for a common cause. Campbell said reforming the secondary mortgage market companies Fannie Mae and Freddie Mac is imperative, but it’s equally imperative not to make things worse, and that’s what the QRM rule will do. Sherman, his Democratic colleague from another part of California, said the rule will give the handful of too-big-to-fail banks monopoly pricing power.
REALTORS® can rightly take pride in the bipartisan comity of lawmakers on this issue. You often hear talk about the partisan contentiousness of today’s legislative process, but when it comes to home ownership, lawmakers continue to work together. More than half of the House and almost half of the Senate have signed a letter to banking regulators expressing their concern over the 20 percent down payment proposal. We can expect more to signal their concern over time as they learn more about the issue — it is, after all, a complicated matter that not all lawmakers are familiar with.
What the press conference showed is that, when lawmakers who are familiar with the issue educate their colleagues about it, the message could just as likely come from a member from the other side of the aisle because it’s a message that both sides care about.