Dear Conrad,
Thank you for contacting me regarding the proposed rule to define qualified residential mortgages (QRM). As always, I value your input and strive to keep you updated on the important issues facing us today.
Last year, we completed a major effort to reform the laws governing the financial industry. The core part of the legislation, which was signed into law [P.L. 111-203] on July 21, 2010, includes a proposed definition for Qualified Residential Mortgages (QRM). This provision seeks to promote sustainable availability of credit and requires that financial institutions retain 5 percent of the risk on certain loans they securitize. The proposed rule on what qualifies as a QRM would require a 20 percent down payment and limits mortgage payments to 28 percent of gross income.
Please know that I understand the impact the QRM provision will have on homebuyers as well as homeowners when they go to sell their homes. It is my hope that the final rule on the terms of a QRM strikes an appropriate balance between ensuring responsible lending practices and making sure that our housing market remains vibrant for buyers and sellers. I remain actively involved in these issues, and I will be paying close attention as the implementation process of the QRM risk-retention provisions moves forward.
Again, thank you for sharing your thoughts with me. Should you have any additional questions or comments, please feel free to contact me or visit my website at www.scottbrown.senate.gov.
  
Sincerely,
Scott P. Brown
United States Senator
Dear Senator Brown,
Thank you for your quick response. I absolutely agree with the 5% provision and the 28% ratio. I am a 39 year veteran of the real estate business. Very few mortgages are written without mortgage insurance with borrowers having less the 20% down. The 20% down requirement will have no effect in stabilizing bank losses. They are protected now. Incidentally how many mortgage insurance companies needed a bailout?
You are a veteran and would qualify for a VA loan. Have you looked at the foreclosure rate? It is insignificant when compared to the "conventional loans". These are zero down mortgages. The ratios for VA go as high as 40%. If you really want to have a significant impact then you need to ban the "ninja" loans. The no income or job verification is the real problem. If you look at the statistics these are the problem loans.
The real problem is that you had brokerage firms become "banks" with an eye only on profits. A little known fact that started this housing crisis was derivatives. The sub-prime mortgage market was only 15% of the total mortgages. Only 15% of these mortgages were delinquent. These mortgages had been divided up into a thousand pieces and then sold. The domino effect occurred taking down huge brokerage firms and creating government bailouts. Too big to fail is ridiculous. Let the market decide who survives.
I would also point out that 91% of all home owners pay federal income taxes. Home ownership is good for the country. The 20% down provision will create unintended consequences that is not necessary to preserve the housing market.
You have proven to be a man who thinks an awful lot before he acts. I would ask you to rethink the 20% down requirement.
Respectfully submitted,
Conrad M. Allen

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Star Posted by Webster, Ma Conrad Allen, Realtor on 06/05/2011 09:31 AM   Comments (17)  
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17 Comments on SENATOR SCOTT BROWN RESPONDS TO QRM ISSUE

JUN
05
2011
522,724 Points 10 Featured Posts Outside Blog Called Shot Master

Well, he answered you without giving you an answer.  Politicalese.  Bah, humbug!
9:35am • #1
857,728 Points 174 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

It's important to note that the 20% down payment required for a QRM only applies to mortgages not backed by the government (Fannie, Freddie, FHA, and VA loans are not included).  So, QRM only applies to normal loans and thus the role is minimal in most parts of the country.
9:38am • #2
145,632 Points Called Shot Master

Good information. The Governor appears to be at least trying  to find some type of solution to the current housing situation.
9:43am • #3
145,632 Points Called Shot Master

Sorry , I meant Senator, not Governor.
9:44am • #4
646,500 Points 68 Featured Posts Outside Blog Attended Rain Camp

You spotted that Ron.

Thanks Bryan, I didn't know that.

I hope so James.
10:33am • #5
JUN
06
2011
1,946,004 Points 477 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

Sorry.  As with all Congressional or governmental communication, they can utter/write/announce, etc. vast amounts or reams of words without saying anything. 

"It is my hope that the final rule on the terms of a QRM strikes an appropriate balance between ensuring responsible lending practices and making sure that our housing market remains vibrant for buyers and sellers"

That's what's known as a non-statement.  In layman's terms, a Weasel clause. 

I can recognize "governmentspeak" from experience.  From my time in government, I can write a 40 page report that says absolutely nothing.  Senator Brown is truly gifted.
7:06am • #6
646,500 Points 68 Featured Posts Outside Blog Attended Rain Camp

Hi Lenn - What did you do in government?
7:08am • #7
551,418 Points 146 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Conrad, don't you hate getting what equates to a form letter when you're actually trying to get a straight answer from a politician?  Our two senators have done that enough times that I quit writing to them.  It's insulting.  Good response on your part.
7:35am • #8
971,917 Points 6 Featured Posts Outside Blog Attended Rain Camp Called Shot Master
That is interesting to post the two letters as a post concept.
8:55am • #9
728,881 Points 15 Featured Posts Outside Blog Called Shot Master

Conrad, this is the same or similar letter I received from my representative.
9:34am • #10
189,071 Points 1 Featured Post

It's almost like communicating with the NAR. I'm sure the extra $40 a year will help solve that problem (haha).
9:44am • #11
1,946,004 Points 477 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

I was a financial analyst and FOIA researcher.
9:51am • #12
175,528 Points 5 Featured Posts Outside Blog

Great post and thanks.  But what still strikes me as funny is that many of us real estate professionals continue to make earnest pleas to our elected officials about the "unintended consequences" of the legislation they aim to pass (or have already passed).  Ladies and gentlemen, the consequences are not a mystery.  We are 4+ years into this real estate cycle and the results of laws and regulations such as HVCC, MDIA, S.A.F.E., FinReg and others have had quantifiable effects on us and the real estate markets we serve.

As a group, we must accept that the direction for housing from Washington is either deleterious or non-existent, and we can start pointing out facts and results when we try to wake them from their stupor.  Rest assured they CAN cure the housing headache by cutting off the head.  That still doesn't help us, our clients or the country.  They have a precedent for letting things get beyond control and not noticing while it's happening.  Could it be happening again and right now?

I wrote a blog post about my thoughts on QRM here:  http://actvra.in/bFn
10:39am • #13
1 Featured Post

As stated above, the form letter is always a nice response. I used to write Senator Kennedy, I am also from MA, and his mastery or his offices mastery of fence sitting was second to none. I have yet to contact Sen. Brown but am not surprised to see gov't as usual. 

I am interested to see the ripple effect of this QRM definition. Let's just hope we do not see it for some time and we can conduct business as usual....

 

 
2:05pm • #14
646,500 Points 68 Featured Posts Outside Blog Attended Rain Camp

Thanks Mike.

Kind of different Cheryl.

I think there is a class for politicians to answer voter's questions.

Ditto Gregory.

Thanks Lenn.

We need to vote them out.  Vote term limits Rpb.

Me too Eric.
2:13pm • #15
JUN
10
2011
871,571 Points 47 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

Conrad, I do hope that Senator Brown listens to what you have written. You speak the truth from your heart and experience. He speaks..well, Lenn said it best.

Sharon
11:23pm • #16
JUN
11
2011
646,500 Points 68 Featured Posts Outside Blog Attended Rain Camp

Hi Sharon - Never heard a word from the Senator.  Sigh.
6:00am • #17


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