What is a QRM (Qualified Residential Mortgage) and What Does it Mean to Me?

Hello Hampton Roads,

A QRM or "Qualified Residential Mortgage" is a mortgage that fits the following criteria:
  • The lender does not have to hold 5% of the loan amount they originate on their books
  • The loan can be securitized--meaning it can be sold on the secondary market
In order for a loan to have QRM status and the crux of the controversy is the proposal for a 20% down payment requirement which would not bode well for the housing market.  This is problematic because it will force those who can't meet this stringent requirement to get more expensive loans or exit the market entirely. Research has shown that a large down payment doesn't correlate with loan default. A better way to insure loan repayment is to have good underwriting rules.

Additionally, requiring a 20% down payment affects lower income borrowers more, and since minorities are over represented in lower income groups, it will unfairly affect these groups.

First-time home buyers would also be negatively affected--87% of first-timers put down less than 20% over the past five years. But repeat buyers are also affected--65% put less than 20% down.

Data shows that it would take the average family 14 years to save 20% down for the average home (see white paper below).

The QRM rules don't affect FHA or VA loans, so these loans will likely become more popular, which means the government will be more involved rather than less.

The new rules will come into effect one year after they are passed.

You can learn more by reading the white paper, found on the NAR's website or by watching the following video:


Banking regulators' proposed rules for defining a qualified residential mortgage would devastate the housing market, NAR research shows:


Thanks for Reading,

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