Tuesday, May 24, 2011

COMMENTARY: Real Estate Could Get a Whole Lot Uglier....Again

Ouch. This is not good.

Every once in awhile something comes up in my "real" life that, frankly, kind of sucks. Right now is one of those times. My "real" life is Real Estate. That's what I do. Helping buyers and sellers buy and sell their homes.

And right now, federal regulators are trying to make that part of my life a whole lot uglier.

Congress recently created the Qualified Residential Mortgage rule (abbreviated QRM), to take affect this year. This regulation was intended to protect lenders and borrowers from the risky lending practices of a few years ago that have led to this debacle of Foreclosures and Short Sales. There are provisions in this rule that federal regulators are now very narrowly defining as requiring borrowers to put down a MINIMUM of 20% when purchasing a new home, or requiring hefty fees and significantly higher interest rates for those loans.

Now I don't know about you, but so far in my "young" life I haven't had 20% to put down on a home purchase. That's a big chunk of change! Not that there aren't buyers out there who can do that; it's just that there aren't very many. Honestly, not very many at all.

I think we all agree that there was some pretty irresponsible lending going on there for a few years. But the reality is that many of us responsible buyers also bought homes during that same period of time and very few of us put 20% down. I make my mortgage payment every month (have never even been late on it, thank you very much!), but if I had to put 20% down on my next house, it would be an awfully long time before I'd be able to do that (according to statistics from the National Association of Realtors, it would take the average person 14 years to save up that much for a downpayment).

Congress never intended this regulation to be so narrowly defined and the National Association of Realtors is asking Congress to press federal regulators to include an exemption in the QRM to allow for traditional loan programs similar to the loans available today; well-underwritten products such as 30-, 15- and 10-year fixed loans with from 5% to 20% down to include Private Mortgage Insurance (PMI).

Of course this is important to me because of my livelihood, but it is important to YOU because you own a home! If you were to try to sell your home in a marketplace where buyers were only allowed to buy if they had 20% down, how much do you think your house would be worth? Unfortunately, supply and demand is real. If there are 5000 homes on the market and 5000 buyers, housing prices are stable. If there are 5000 homes on the market and 50 buyers, prices will plummet. And boy, do I mean plummet.

Please call or email your Congressperson, Senator and anyone else you can think of TODAY to let them know you want mortgage loans to stay affordable!

Look up your Congressperson and Senator by clicking here, then enter your zipcode: http://www.contactingthecongress.org/.

Call or email them today. Tell them to protect America from the QRM. Tell them to keep mortgage loans affordable for qualified home buyers. Tell them America cannot afford another housing crisis.

Anyone who owns a home -- or merely wants to own one someday -- is going to be affected by the outcome of this. Please take the time to make the call.

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