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Companies, Industry Groups Continue QRM Rule Fight

Real estate and relocation servicers provider ""Realogy Corporation"":http://www.realogy.com/ became the latest in a string of companies and trade associations to file critical commentary with regulatory authorities overseeing the Qualified Residential Mortgage (QRM) rule, the embattled proposal that industry groups say would crimp housing by forcing homebuyers to front 20 percent in down payments.

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In a ""statement"":http://www.realogy.com/media/pr/show_release.cfm?id=1044, Realogy said it ""filed"":http://www.realogy.com/documents/RealogyFilesCommentsDoddFrankMortgageRules.pdf a proposal to replace the QRM rule, as created by the Dodd-Frank Act, with an ""enhanced disclosure approach"" that would require mortgage-backed securities issuers to fully and accurately disclose risks in published analysis.

""We believe the current QRM definition that includes a down-payment requirement of 20% would create unduly tight credit standards and place homeownership out of reach for millions of potential buyers,"" Richard Smith, president and CEO of Realogy, said in the statement. ""This was not the intent of Congress when the Dodd-Frank Act was passed, and we remain hopeful that the regulators will make a course correction, wisely choosing not to damage an already fragile housing market.""

The commentary filed with regulatory authorities marks another stab by companies and industry groups at the controversial QRM rule.

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In June, the Coalition for Sensible Housing Policy (CSHP) released a white paper outlining the considerable risks a QRM rule would pose to mortgage markets. Over 320 members of Congress and some 44 civil rights organizations and lenders, among others, endorsed the paper and stood with CSHP to call for a reversal of the rule.

In a ""statement"":http://hagan.senate.gov/?p=press_release&id=1082, one of the opposing lawmakers, Sen. Kay Hagan (D-North Carolina), called the rule and other stipulations ""strict, inflexible restrictions proposed by banking regulators [that could] put home ownership out of reach for many creditworthy American families,"" adding that ""the proposed rule runs counter to the commonsense, bipartisan provision"" that she and other senators wrote into Dodd-Frank.

""The proposed QRM goes too far in restricting credit, which will harm borrowers and the nation's fledgling economic recovery,"" Frank Keating, president and CEO of the ""American Bankers Association"":http://www.aba.com/default.htm (ABA), said in a statement. ""We stand as part of [CSHP] in seeking a revision of this ill-conceived proposal.""

Bob Davis, ABA's EVP for mortgage markets and public policy, told _MReport_ in a past interview that the QRM rule would nip a market already devoid of risky loans.

""If you end up with an overly restrictive risk retention requirement├â┬ó├óÔÇÜ┬¼├é┬ª it will eliminate 50 percent to 70 percent of loans the GSEs are buying,"" he said. ""It will come out of conservatorship and be subject to these restrictions. There are no risky loans being generated today,"" and these may further decline if the QRM rule goes on record.

The six regulatory agencies responsible for the QRM rule ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô a band that includes the ""Federal Reserve"":http://www.federalreserve.gov/, ""Office of the Comptroller for the Currency"":http://www.occ.treas.gov/, and ""FDIC"":http://www.fdic.gov/, among others ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô will allow commentary for the proposed rule until August 1.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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