Federal Agencies Release New Qualified Residential Mortgage Proposal

On August 28th, six federal agencies tasked with writing mortgage rules released new draft regulations to define the characteristics of Qualified Residential Mortgages or QRMs. Mortgages classified as QRMs will likely have lower interest rates and are projected to become the preferred mortgage product offered to consumers.

Federal banking regulators have struggled to define QRM characteristics, which has led to an extended rulemaking process. A proposed QRM regulation was published in mid-2011, which if left unchanged was projected to deny many safe, creditworthy borrowers access to mortgage credit.

A survey of CAI members revealed significant concerns with the 2011 proposed QRM regulation. CAI raised these concerns in an October 2011 letter to federal regulators that also included policy proposals to ensure that community association homeowners were treated fairly under any final QRM regulation.

The new QRM proposal makes fundamental changes to the 2011 draft regulation by harmonizing the definition of QRM with another key federal mortgage rule. Consistency between mortgage regulations will help ensure that community association homeowners are able to access mortgage credit based on an ability to repay their mortgage. This is a generally positive result that will lead to stronger homeowners and stronger communities.

As with any federal rule, details are important. CAI has the newly proposed regulation under review and will provide additional information for members as it becomes available.