Did NAR defeat QRM or did they actually help it?
Well, another post about who (or whom?) NAR is working for with their agenda. Wonder how much this lobbying efffort has cost it's members not that I (we) will ever seen a written account of the dollars spent.
I restate my opinion on what is currently happening in our real estate world. It's not a real estate crisis but a 'lending crisis'. Unfortunately housing and lending go hand in hand. You obviously can't have one without the other as no one has cash anymore. It is no longer that type of world.
When reading previous stories on the QRM I felt like I was propelled back to grade school politics and the school yard. NAR says they are 'in' the fight. But are they really? Are they just acting like little kids playing both sides in a school yard scuffle?
The latest news from the battlefront in Washington D.C. is that NAR has successfully rallied support to defeat QRM by convincing 40 Senators and 150 House members to sign letters asking regulatory agencies to reconsider the 20% down rquirement for QRM loans. It was a hard fought battle by REALTORS® and NAR even produced a video outlining the devastating impact a 20% down payment could have on the market. There's only one problem...
NAR lied.
What they told REALTORS®, over 1 million people, was that the 20% down requirement would completely destroy lending. They implied that if the rule were passed every buyer in America would be required to put 20% down on all their loans. Since only a small percentage of all borrowers come in with 20% or more down, the market would fall apart. We'd fly fast into another recession. The real estate business would collapse. Jobs would be lost and we'd see the gapping maw of unemployment swallow us all up and spit us onto the soup kitchen lines. It would be the end of real estate as we know it!!! What they didn't tell anyone are these two simple facts:
- The 20% down rule in QRM only applies to 10% of all mortgages (READ THAT AGAIN PLEASE)
- The 20% down rule DOES NOT APPLY to Fannie, Freddie, FHA, VA, or other government loans
That's right! You read that correctly. All the whiners who claimed it would stop everyone from getting Fannie, Freddie, FHA, VA, and USDA loans were absolutely, completely, and totally HOODWINKED by NAR. First-time homebuyers would not be affected as most get FHA or similar financing. Refinancing could be an issue but most could not qualify anyway because they are already in negative equity. A bank won't refinance with negative equity so no change there. Unfortunately, most agents don't read the details of the legislation and NAR was conveniently quiet on those details. The 20% down rule only applied to conventional loans retained by the banks. If you don't agree with requiring 20% down, fine, but at least fight it knowing which loans it applies to!
Guess who lost in all this? Wait for it...wait for it...REALTORS®! Yes, that's right, we just saw gobs of our dues spent fighting something that in fact would have had nearly no impact on our markets. Our fight against QRM might actually help it in the end as proponents work harder to clarify the misunderstanding that NAR promoted.
What's ironic is that the banks are laughing about this. NAR fought along with the Mortgage Bankers Association on this issue. They don't want tighter lending rules because it will require them to hold onto loans they could sell. If we want to protect the consumer and promote homeownership, then wasting money fighting legislation that actually makes sense is not the way to do it. The next time NAR sends another one of those stupid notices asking for your support, do a little more than read their soundbite summary of the issue. Read the details and make an informed decision.If you have enjoyed reading my blog, please subscribe HERE!
Bryan Robertson, Broker Associate
Realtor, Developer, e-ProSereno Group - Los Altos
369 South San Antonio Road, Los Altos, CA 94022
DRE# 01191946
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