The new regulations on mortgage requirements set by the Dodd-Frank Act, and the Federal Reserve's recent regulations proposal, may have a negative impact on both realtors and consumers in today's slow-moving housing recovery.
These new regulations, Qualified Mortgage (QM), Qualified Residential Mortgage (QRM), and Base III, now being considered, have been giving lenders Fannie Mae and Freddie Mac a hard time a hard time lately.
According to RISMedia, the National Association of Realtors (NAR) Real Estate Services Director Ken Trepeta, said the new appointed regulations, has the ability to quickly change the views of homeownership and shut down the finance market to a good number of homebuyers.
"If the ability-to-repay rules of QM are written too narrowly, it would tighten credit even more for all but the most credit-worthy buyers," Trepeta told RISMedia.
"As for QRM, if the rule requires a minimum down payment of 20 percent, much of the first-time buyer market outside of FHA would simply disappear."
Trepeta also mentioned that the most concern about Basel III are its detailed risk-weighting requirements that would give bankers no choice but to hold more capital for all loans, except the most conservative ones.
This will make them more expensive for consumers as well as hard to get.
"If regulators do the wrong thing on any one of these issues, he result could be a ticking time bomb for the housing recovery we are just beginning to see," Trepeta said.
"Even if regulators get it right, credit overall will likely be tighter. If they botch it, it could be disastrous."
