Two monumental decisions in U.S. housing regulations this week are major victories for homebuyers – and the housing industry at large.
For starters, the final qualified residential mortgage, or QRM, rule eliminates the highly controversial requirement of a specific down payment amount, bringing the rule in line with the Consumer Financial Protection Bureau’s qualified mortgage, or QM, rule. The latter was created to protect borrowers from predatory lending practices.
Another victory for housing: Fannie Mae and Freddie Mac are releasing new guidelines that will allow borrowers with lackluster credit profiles to obtain loans with a down payment as low as 3 percent by considering “compensating factors.” Federal Housing Finance Agency Director Mel Watt, who oversees both Fannie and Freddie, announced the government’s new plan in hopes of quelling lenders’ fears when the government-backed loans they sell go sour.
Additionally, Fannie and Freddie also plan to loosen demands on lenders to buy back defaulted mortgages, creating more stability, confidence and clarity for the lending industry.
RE/MAX CEO Margaret Kelly applauded the announcements, which ultimately help first-time homebuyers, as well as those who earn lower incomes, to more easily obtain government-backed loans.
“This is great news for our industry, and it’s a welcomed change we’ve been advocating at RE/MAX,” Kelly says. “Taking a measured but less stringent approach to lending creates more stable housing conditions and, most importantly, opens the doors to homeownership for qualified, willing homebuyers who’ve been sidelined in the wake of the downturn.”
Read more about these key housing developments:
NAR: QRM Mortgage Rule Could Ease Credit for Consumers
Los Angeles Times: Regulator unveils plan to spur lending by Fannie, Freddie
New York Times: Federal Housing Finance Agency Unveils Plan to Loosen Rules on Mortgages