THE AMERICAN DREAM MAY BE OUT REACH!
We have heard the rumors but can it really happen? At one point the theory was everyone
deserved to own a home. And, accordingly, loan underwriting guidelines were written to
make that possible. And what happened? Look where the housing market is today?
Typical knee jerk reaction. Now let's punish those who have acted responsibly. As it turns
out Congress is indeed discussing proposed revised legislation which will require 20% down
payment by future potential home owners. Of the 20% down, the lenders will be
required to hold 5% of the value of the loans they generate if the loans will be sold to
investors. And most loans are sold. What is the theory behind the legislation? It is to
prevent lenders from approving risky loans. If the loan goes into default, the lender
will have to contribute 5% to the loan in default.
The exception - QRM: Qualified Residential Mortgage. Under new, and more narrowed,
regulations governing QRM, the loan is less risk because the home buyer has put down
20% down; and as a result, the lender will not be required to hold 5% on these loans.
According to NAR 60% of recent home owners made less than a 20% down payment in the
purchase of their home. The projection is, under this new legislation, it would take
approximately 14 years to save up a 20% down payment to buy a median-priced home.
Can you see the buyer pool shrinking? Sure it will! The housing market is the back bone
and engine to our economic recovery, growth and stability!!! No doubt lending guidelines
needed to be tightened up - and they already have. The housing market is the back bone
of our economy and key to our recovery.
What can you do to make the American Dream within reach for responsible buyers?
CONTACT YOUR CONGRESSMAN and let your voice be heard - "Tell them to instead implement
a more reasonable QRM which will keep credit-worthy buyers in the real estate market and
able to acquire a loan." (GA Assoc of Realtors)
Further Reading:
June 8, 2011 - Updated Reading: Homeownership Under Attack?
NASDAQ - 4 in 10 Will Not Qualify
Mortgage Professional - NAMB Issues Call to Action Regarding QRMs
Come to my house:
MySUWANEEHome.com
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