NAR spearheaded a 33-member coalition in sending a letter to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray calling for a broadly defined Qualified Mortgage (QM) under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Several meetings with CFPB led NAR and others to believe that CFPB is considering a narrow QM more in line with the much-maligned Qualified Residential Mortgage (QRM) proposal.
The QRM proposal included very tight standards including very low debt to income ratios, strict credit standards, and a 20% downpayment requirement. Neither QM nor QRM was intended to be so strict as deny otherwise eligible borrowers access to affordable mortgage credit. In the case of QM, the effect could very well be to completely deny access to credit as the potential liability for producing non-QM loans will make such loans largely unavailable according to the lending industry. Credit is already tighter and a narrow QM would strangle access to credit according to industry analysis.