Reform of the secondary mortgage market was the subject of a new bill heard by the House Financial Services Committee last week, which was given the thumbs up by incoming National Association of Realtors President Vince Malta.
RealtorMag quotes Malta as saying that the Bipartisan Financing Reform Act of 2018, put forward by Rep. Jeb Hensarling (R-Texas), helps to maintain a federal guarantee for conforming conventional loans, which is something the NAR has long supported.
However, testifying before the committee, Malta asked lawmakers to remove a minimum five percent down payment requirement, saying that responsible, creditworthy households should not be prevented from obtaining safe and affordable financing due to what he said is a “hard and fast” rule.
Malta said that “the amount of down payment by itself is a weak predictor” of a borrower’s credit performance.
Other proposed changes to the bill include a transition period to the new system, plus more regulatory flexibility regarding the implementation of the new qualified mortgage definition, Malta said. The qualified mortgage is the conventional conforming mortgage that meets standards for backing by the federal government.
Lastly, Malta asked lawmakers to act on a proposal by the NAR to create a mortgage market liquidity fund, which would enable a part of the profits of secondary market entities to be used to stabilize companies if necessary, so these don’t need to rely on U.S. Treasury funds to bail them out.