NEW YORK - Proposed changes to mortgage qualification standards are bad policy and should be rejected, National Urban League President and CEO Marc H. Morial said in a letter to the six agencies charged with developing new regulations.
“A Rule that stifles homeownership for communities of color will also negatively suppress the entire housing industry – realtors, builders, retailers, suppliers and many others,” Morial said. “The proposed Rule is anti-jobs, anti-growth and in absolute contravention of the American Dream.”
A proposed Qualified Residential Mortgage Rule would require prospective borrowers to present a 20 percent down payment, spend less than 28 percent of their monthly gross income on housing and have a total monthly household debt capped at less than 36 percent.
“When coupled with an additional requirement of near-pristine personal credit standards, these proposed requirements could make for a marketplace where the 30-year fixed mortgage is no longer the standard-bearer for residential lending, and a host of oppressive fees precipitated by a spontaneously created class of newly-designated ‘high risk’ borrowers, formerly known as the responsible middle-class borrower, takes its place,” Morial said.
Morial sent the letter to the heads of the six agencies charged with developing risk retention regulations under the Dodd-Frank Wall Street Reform Act: Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben S. Bernanke, Housing and Urban Development Secretary Shaun Donovan, Comptroller of the Currency John Walsh, FDIC Chairman Sheila C. Bair, SEC Chairman Mary L. Schapiro and Federal Housing Finance Agency Acting Director Edward DeMarco.
“The American family home, by definition, reflects much more than mere property,” Morial said. “It represents the ability to build wealth for all those with a stable income and a demonstrated history of financial responsibility. It represents the foundation of the family and the surrounding community. It represents the collective promise of the chance to build prosperity that lasts through generations.