NAR urges Congress to loosen mortgage regulations

by MPA17 Apr 2015
Unnecessary regulatory burdens are preventing qualified, credit-worthy borrowers from obtaining the American Dream of homeownership. That's according to testimony today from the National Association of Realtors (NAR) before the U.S. Senate Banking, Housing and Urban Affairs Committee. 

"Realtors support strong underwriting standards to protect consumers from the risky lending practices of the past, but we are concerned that the pendulum has swung too far,” said NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Arkansas. “In some cases, well-intentioned, but over-corrective policies are severely hampering the ability of millions of qualified buyers to purchase a home.”  

Despite historically low mortgage rates, the number of first-time buyers entering the market is at the lowest point since 1987 and the nation's homeownership rate has almost fallen to levels last seen in 1990. Today, the number of homes purchased annually remains less than 70% of what was purchased prior to the real estate bubble and subsequent collapse, according to NAR.

Chris Polychron, a Realtor(r) from Hot Springs, Ark., is the 2015 President of the National Association of Realtors(r). NAR, The Voice for Real Estate(r), is America's largest trade association, representing 1 million members involved in all aspects of the residential and <a href=commercial real estate industries. A Realtor(r) for 27 years, Chris is an executive broker with 1st Choice Realty in Hot Springs, specializing in residential and commercial brokerage." height="125" hspace="12" src="data:image/png;base64,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" width="92" />"No one wants to see a return to the unscrupulous, predatory lending practices that caused the Great Recession, but some modifications to existing regulations would help restore the homeownership rate to pre-bubble levels," Polychron said in his testimony.

In his testimony, Polychron proposed adjustments to a range of regulations that would provide consumers with valuable protections and safe access to mortgage credit. He recommended changes to restrictive condominium polices from the Federal Housing Administration and the government-sponsored enterprises, which limit opportunities for buyers to own condos. Condos often represent the most affordable buying options for first-time homebuyers and minorities.

Polychron called on the Consumer Financial Protection Bureau (CFPB) to encourage more lending from responsible community banks and also provide more flexibility for lending in small specialty markets such as rural communities.
He also cautioned the CFPB to anticipate the potential for problems and issues to be uncovered during the implementation of the Real Estate Settlement and Procedures Act and Truth in Lending Act changes. The rule changes take effect on August 1, the busiest transaction time of the year.  While NAR is supportive of the new harmonization, Polychron suggested a restrained approach to initial enforcement efforts by the CFPB.

During his discussion of the CFPB, Polychron pressed for the U.S. Senate to pass the Mortgage Choice Act, bipartisan legislation that importantly redefines a provision in the Ability-to-Repay rules that limits mortgage fees and points to 3% in order for home loans to be considered Qualified Mortgages (QM).

“As they are currently written, the rules unfairly prevent consumers from obtaining QM loans through certain affiliated lenders whose joint venture services are collectively counted against the cap, while individual services from large retail financial institutions are each capped separately,” NAR said. “The discrimination in the calculation of fees and points is being felt by consumers, including lower-end buyers, who are seeing reduced choices and added obstacles in their transactions.”

Polychron also raised concerns that high guarantee fees and loan level pricing adjustments charged by the GSEs are negatively impacting the housing recovery. Instead of luring private capital into the market, increasing fees will only raise the cost of homeownership or redirect more mortgage loans to FHA without a private sector return, he added.
 

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