Representatives from the National Association of Home Builders (NAHB) and National Association of Realtors (NAR) have responded to the announcement by six federal regulators to establish new rules for a qualified residential mortgage that would exempt securitizers from retaining 5% of the credit risk on loans packaged and sold as securities.

"NAHB commends U.S. financial regulators for aligning the definitions of a qualified residential mortgage (QRM) and the qualified mortgage (QM), the standard lenders must follow to demonstrate they have determined a borrower's ability to repay a mortgage loan," said Kevin Kelly, NAHB's chairman and a home builder and developer from Wilmington, Del.

"Since 2011, NAHB has worked independently and with a coalition of housing advocates to urge regulators to establish a QRM rule that removes down payment requirements and other onerous underwriting criteria to alleviate confusion in the marketplace and keep homeownership affordable for working American families.

"We applaud regulators for taking these measures. The new QRM rule will encourage sound lending behaviors that support a housing recovery, attract private capital in the mortgage market, help ease tight credit conditions for borrowers and reduce future defaults without punishing responsible borrowers and lenders."

Steve Brown, president of NAR added, “NAR applauds the Federal Deposit Insurance Corporation for finalizing the QRM rule, which includes a broad definition of QRM and aligns with the QM standard implemented earlier this year.

“Realtors are confident that the new QRM rule will encourage sound and financially prudent mortgage financing by lenders while also ensuring responsible homebuyers have access to safe and affordable credit. The synchronization with the QM rule will provide lenders with much needed clarity and consistency as they apply the new standards to loan applications while also providing a framework to bring more competition to the secondary mortgage market.

“The new QRM rule is a healthy step towards a more robust securities market that will reduce the government’s footprint and creates more opportunities for private capital to participate.

“Importantly, the final rule relies on sound and responsible underwriting rather than on an onerous down payment requirement to qualify as a QRM loan. NAR strongly opposed earlier versions of the rule that included 20 and 30 percent down payment requirements, which would have denied millions of Americans access to the lowest cost and safest mortgages. 

"To mobilize against the proposed QRM rules that would have excluded credit-worthy Americans from the housing market, NAR forged the broad-based Coalition for Sensible Housing Policy, a partnership of approximately 50 consumer organizations, civil rights groups, lenders and real estate professionals united in their opposition to high down payment requirements.

“The QRM rule is a win-win for consumers, realtors and the housing finance industry. NAR thanks U.S. Sens. Johnny Isakson, R-Ga., Kay Hagan, D-N.C. and Mary Landrieu, D-La., for their work to craft an effective QRM rule that supports middle-class families and the housing recovery. We look forward to working with regulators and industry stakeholders on the implementation of the new risk-retention standards.”