An issue of great concern to Realtors is being fought as the National Association of Realtors, along with state and local Realtor associations and some homeowners, is challenging proposed risk-retention rules relating to so-called "qualified residential mortgages" (QRMs).
The QRM proposal is an element of the Dodd-Frank Wall Street Reform and Consumer Protection Act that passed last year.
Dodd-Frank requires financial institutions that securitize mortgage loans to retain at least 5 percent of the credit risk for non-QRM loans, and exempts from the risk-retention requirements those securities backed exclusively by QRMs.
Those loans that are classified as QRMs would require:
1. An 80 percent loan-to-value ratio, which requires a 20 percent down payment.
2. Limiting mortgage payments to 28 percent of gross income and limiting all debt to 36 percent.