SENATOR SCOTT BROWN RESPONDS TO QRM ISSUE

By
Real Estate Agent with Re/Max Professional Associates 74203
 
 
Dear Conrad,
 
Thank you for contacting me regarding the proposed rule to define qualified residential mortgages (QRM). As always, I value your input and strive to keep you updated on the important issues facing us today.
 
Last year, we completed a major effort to reform the laws governing the financial industry. The core part of the legislation, which was signed into law [P.L. 111-203] on July 21, 2010, includes a proposed definition for Qualified Residential Mortgages (QRM). This provision seeks to promote sustainable availability of credit and requires that financial institutions retain 5 percent of the risk on certain loans they securitize. The proposed rule on what qualifies as a QRM would require a 20 percent down payment and limits mortgage payments to 28 percent of gross income.
 
Please know that I understand the impact the QRM provision will have on homebuyers as well as homeowners when they go to sell their homes. It is my hope that the final rule on the terms of a QRM strikes an appropriate balance between ensuring responsible lending practices and making sure that our housing market remains vibrant for buyers and sellers. I remain actively involved in these issues, and I will be paying close attention as the implementation process of the QRM risk-retention provisions moves forward.
 
Again, thank you for sharing your thoughts with me. Should you have any additional questions or comments, please feel free to contact me or visit my website at www.scottbrown.senate.gov.
  
 
  Sincerely,
Scott P. Brown
United States Senator
Dear Senator Brown,
Thank you for your quick response. I absolutely agree with the 5% provision and the 28% ratio. I am a 39 year veteran of the real estate business. Very few mortgages are written without mortgage insurance with borrowers having less the 20% down. The 20% down requirement will have no effect in stabilizing bank losses. They are protected now. Incidentally how many mortgage insurance companies needed a bailout?
You are a veteran and would qualify for a VA loan. Have you looked at the foreclosure rate? It is insignificant when compared to the "conventional loans". These are zero down mortgages. The ratios for VA go as high as 40%. If you really want to have a significant impact then you need to ban the "ninja" loans. The no income or job verification is the real problem. If you look at the statistics these are the problem loans.
The real problem is that you had brokerage firms become "banks" with an eye only on profits. A little known fact that started this housing crisis was derivatives. The sub-prime mortgage market was only 15% of the total mortgages. Only 15% of these mortgages were delinquent. These mortgages had been divided up into a thousand pieces and then sold. The domino effect occurred taking down huge brokerage firms and creating government bailouts. Too big to fail is ridiculous. Let the market decide who survives.
I would also point out that 91% of all home owners pay federal income taxes. Home ownership is good for the country. The 20% down provision will create unintended consequences that is not necessary to preserve the housing market.
You have proven to be a man who thinks an awful lot before he acts. I would ask you to rethink the 20% down requirement.
Respectfully submitted,
Conrad M. Allen
 
   

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  1. Donald Bradbury 06/06/2011 03:46 PM
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Rainmaker
760,511
Ron Marshall
Marshall Enterprises - Saint Michael, MN
Birdhouse Builder Extraordinaire

Well, he answered you without giving you an answer.  Politicalese.  Bah, humbug!

Jun 05, 2011 09:35 AM #1
Ambassador
1,104,955
Bryan Robertson
Catarra Real Estate, Inc - Los Altos, CA
Broker, Author, Speaker

It's important to note that the 20% down payment required for a QRM only applies to mortgages not backed by the government (Fannie, Freddie, FHA, and VA loans are not included).  So, QRM only applies to normal loans and thus the role is minimal in most parts of the country.

Jun 05, 2011 09:38 AM #2
Rainer
219,798
James Loftis
Real Estate 911 Inc - Hollywood, FL
Real Estate 911 Inc

Good information. The Governor appears to be at least trying  to find some type of solution to the current housing situation.

Jun 05, 2011 09:43 AM #3
Rainer
219,798
James Loftis
Real Estate 911 Inc - Hollywood, FL
Real Estate 911 Inc

Sorry , I meant Senator, not Governor.

Jun 05, 2011 09:44 AM #4
Rainmaker
1,101,266
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

You spotted that Ron.

Thanks Bryan, I didn't know that.

I hope so James.

Jun 05, 2011 10:33 AM #5
Ambassador
2,432,404
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Sorry.  As with all Congressional or governmental communication, they can utter/write/announce, etc. vast amounts or reams of words without saying anything. 

"It is my hope that the final rule on the terms of a QRM strikes an appropriate balance between ensuring responsible lending practices and making sure that our housing market remains vibrant for buyers and sellers"

That's what's known as a non-statement.  In layman's terms, a Weasel clause. 

I can recognize "governmentspeak" from experience.  From my time in government, I can write a 40 page report that says absolutely nothing.  Senator Brown is truly gifted.

Jun 06, 2011 07:06 AM #6
Rainmaker
1,101,266
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Lenn - What did you do in government?

Jun 06, 2011 07:08 AM #7
Rainmaker
810,806
Mike Cooper
Winchester Real Estate Sales, Cornerstone Business Group Inc - Winchester, VA
Your Winchester, VA Real Estate Pro

Conrad, don't you hate getting what equates to a form letter when you're actually trying to get a straight answer from a politician?  Our two senators have done that enough times that I quit writing to them.  It's insulting.  Good response on your part.

Jun 06, 2011 07:35 AM #8
Rainmaker
1,181,210
Cheryl Ritchie
RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD
Southern Maryland 301-980-7566
That is interesting to post the two letters as a post concept.
Jun 06, 2011 08:55 AM #9
Rainmaker
894,862
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Conrad, this is the same or similar letter I received from my representative.

Jun 06, 2011 09:34 AM #10
Rainmaker
190,143
Gregory Bain
Mezzina Real Estate & Insurance - Little Egg Harbor, NJ

It's almost like communicating with the NAR. I'm sure the extra $40 a year will help solve that problem (haha).

Jun 06, 2011 09:44 AM #11
Ambassador
2,432,404
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I was a financial analyst and FOIA researcher.

Jun 06, 2011 09:51 AM #12
Rainmaker
263,393
Rob Spinosa
RPM Mortgage, Marin County, CA - Mill Valley, CA
Marin Mortgage Broker

Great post and thanks.  But what still strikes me as funny is that many of us real estate professionals continue to make earnest pleas to our elected officials about the "unintended consequences" of the legislation they aim to pass (or have already passed).  Ladies and gentlemen, the consequences are not a mystery.  We are 4+ years into this real estate cycle and the results of laws and regulations such as HVCC, MDIA, S.A.F.E., FinReg and others have had quantifiable effects on us and the real estate markets we serve.

As a group, we must accept that the direction for housing from Washington is either deleterious or non-existent, and we can start pointing out facts and results when we try to wake them from their stupor.  Rest assured they CAN cure the housing headache by cutting off the head.  That still doesn't help us, our clients or the country.  They have a precedent for letting things get beyond control and not noticing while it's happening.  Could it be happening again and right now?

I wrote a blog post about my thoughts on QRM here:  http://actvra.in/bFn

Jun 06, 2011 10:39 AM #13
Rainer
51,126
Eric Brickley
Zenith Mortgage Advisors (Milford,MA) - Framingham, MA

As stated above, the form letter is always a nice response. I used to write Senator Kennedy, I am also from MA, and his mastery or his offices mastery of fence sitting was second to none. I have yet to contact Sen. Brown but am not surprised to see gov't as usual. 

I am interested to see the ripple effect of this QRM definition. Let's just hope we do not see it for some time and we can conduct business as usual....

 

 

Jun 06, 2011 02:05 PM #14
Rainmaker
1,101,266
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Thanks Mike.

Kind of different Cheryl.

I think there is a class for politicians to answer voter's questions.

Ditto Gregory.

Thanks Lenn.

We need to vote them out.  Vote term limits Rpb.

Me too Eric.

Jun 06, 2011 02:13 PM #15
Rainmaker
979,653
Sharon Alters
Coldwell Banker Vanguard Realty - Fleming Island, FL
Your Fleming Island Relocation Agents.

Conrad, I do hope that Senator Brown listens to what you have written. You speak the truth from your heart and experience. He speaks..well, Lenn said it best.

Sharon

Jun 10, 2011 11:23 PM #16
Rainmaker
1,101,266
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Sharon - Never heard a word from the Senator.  Sigh.

Jun 11, 2011 06:00 AM #17
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Conrad Allen

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