05 Apr The Right Decision for Homebuyers in This Economy?
According to the NAHB, Congress and the Administration continue to debate potential reforms of the housing finance companies Fannie Mae and Freddie Mac. But will these new policies further destabilize the struggling housing market?
The NAHB believes the proposed rules contain a harshly narrow definition of Qualified Residential Mortgage (QRM), requiring a minimum down payment of 20 percent, which would seriously disrupt the housing market by making mortgages unavailable or unnecessarily expensive for many creditworthy borrowers.
By stipulating such a large down payment for a loan to be considered a QRM, the Administration and federal agencies are appropriating congressional efforts to reform the housing finance system by imposing a narrow and rigid gateway to the secondary mortgage market. But attempts to recover this market with a myriad of dramatic changes across the board may not be the right answer in this economic climate.
While it is understandable that efforts are being made to modernize and stabilize the nation’s housing finance system, this extreme proposal could and would most likely cause renewed stress and uncertainty for borrowers who are trying to obtain an affordable, sustainable home.
A stable housing sector is essential for economic recovery and long-term prosperity.
Private capital must be the dominant source of mortgage credit, and it must also bear the primary risk in any future housing finance system.
Changes to the mortgage finance system should be done carefully and over a reasonable transition period to ensure that a reliable mortgage finance system lasts in the years ahead.
What are your thoughts? How will these proposed changes affect your business? Should Congress be this stringent with first-time homebuyers?
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