Magazine article Mortgage Banking

QRM Proposed Rule Could Hike Refinance Costs for Nearly 25 Million

Magazine article Mortgage Banking

QRM Proposed Rule Could Hike Refinance Costs for Nearly 25 Million

Article excerpt

The Coalition for Sensible Housing Policy, an alliance of more than 40 housing industry and homeowner advocacy groups, said refinancing costs would be dramatically hiked if the proposed rule implementing the Qualified Residential Mortgage (QRM) definition is adopted without modification to its down-payment requirements.

The group said that an analysis of Santa Ana, California-based CoreLogic's data shows that 24.8 million U.S. homeowners--more than half of homeowners (52 percent) with a mortgage--have less than 25 percent equity in their homes and would not be able to meet the proposed QRM requirement of putting at least 25 percent down to do a QRM refinance. Experts widely expect that loans meeting the QRM definition will get favored pricing over non-QRM loans.

"According to the National Association of Realtors [R], consumers in a non-QRM loan could pay between 0.8 [percentage points] and 1.85 percentage points more in interest rates simply because they could not meet the down-payment or equity requirements," according to a release issued by the coalition.

The Dodd-Frank Wall Street Reform and Consumer Protection Act required financial regulators to propose the terms of a definition for a Qualified Residential Mortgage that would be exempt from the law's risk-retention requirements. …

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