REALTORS (r), in case you didn't know it...this time next year if things don't change...most buyers will be required to put down 20% in order to buy a home due to the new Qualified Residential Mortgage rules. The new QRM Guidelines will be in full force April 2012.
(Jumbo mortgages....expect 30%+ down payments.)
If there was ever a time to support The National Association of Realtors...its NOW. NAR is our ONLY voice in Washington..NAR not only defends our industry but, homeownership.
Here are the facts that you need to know:
* A proposal to federal regulations, called QRM (qualified residential mortgages) would mandate a 20 percent down payment for buyers wishing to qualify for a conventional, non-government- backed residential mortgage. Exempt from the requirement are certain QRMs; FHA and VA mortgages are also exempted.
* According to the National Association of Realtors, 60 percent of recent home buyers made less than a 20 percent down payment.
* The national group's data also shows it takes 14 years for a typical person to save a 20 percent down payment to buy a median-priced home.
* Realtors say the proposed rule would not only affect buyers, but it would also affect the ability of home-owners to sell their homes, since there would be fewer buyers who could qualify for home ownership.
* Why is this happening...new government regulation! A provision in the Dodd-Frank Act signed into law last year requires that financial institutions retain 5 percent of the risk on loans they securitize. The purpose is to discourage excessive risk-taking and create strong incentives for responsible lending and borrowing.
"NAR firmly believes Congress intended to create a broad QRM exemption-strong evidence shows that responsible lending standards and ensuring a borrower's ability to repay have the greatest impact on reducing lender risk, and not high down payments," said the national group's president Ron Phipps. "Saving the necessary down payment has always been the principal obstacle to buyers seeking to purchase their first home. Proposals that require high down payments will only drive more borrowers to FHA, increase costs for borrowers by raising interest rates and fees, and effectively price many eligible borrowers out of the housing market."
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