Housing Finance Reform Must Provide Reliable Credit to Home Buyers, NAHB Tells Congress

[Friday, July 13, 2012]  The National Association of Home Builders (NAHB) told Congress this week that proposed mortgage lending reforms under the Dodd-Frank Act must be imposed in a manner that causes minimum disruption to the mortgage markets while ensuring consumer protections.

Testifying before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, NAHB First Vice Chairman Rick Judson, a home builder from Charlotte, N.C., said that “NAHB believes a housing finance system that provides adequate and reliable credit to home buyers at reasonable interest rates through all business conditions is critical to our nation’s economic health.”

At the heart of this issue is the definition of a new “qualified mortgage” (QM) as required under the Dodd-Frank legislation passed in 2010 that could have a profound effect on mortgage originations. The legislation includes an “ability to repay” provision that requires lenders to establish that home buyers have a reasonable chance of paying back the loan at the time the mortgage is written. This will set the foundation for the future of mortgage financing, as all mortgages will be subject to these requirements.

“NAHB urges the Consumer Financial Protection Bureau (CFPB) and policymakers to consider the long-term ramifications of these rules on the market, and not to place unnecessary restrictions on the housing market based solely on today’s economic conditions,” said Judson. “Overly restrictive rules will prevent willing, creditworthy borrowers from entering the housing market.” Read More ...