The National Association of Realtors yesterday urged Congress to move cautiously when reforming government-sponsored enterprises Fannie Mae and Freddie Mac.

“NAR strongly agrees that the existing system failed and that reforms are needed; however, redesigning a viable secondary mortgage model that will protect taxpayer dollars and serve the country’s home owners today, and in the future, can only be achieved through a methodical, measured effort,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I.

NAR is concerned that without a comprehensive plan for reforming the secondary mortgage market, proposed legislation to quickly constrain Fannie Mae and Freddie Mac before an adequate replacement secondary mortgage market mechanism is established will further disrupt the still fragile housing market recovery.

“Realtors agree that increasing private capital in the mortgage finance market is necessary for a healthy market and for reducing the government’s involvement; however, proposed legislation that relies only on private capital to operate the secondary mortgage market will slow, if not stop, the housing and economic recovery,” he said.

He added that overreaching rules, like the qualified residential mortgage (QRM) exemption, could further curtail access to affordable credit and will only slow economic growth and hamper job creation.

“The QRM is likely to shape housing finance for the foreseeable future, and we believe that Congress intended to create a broad QRM exemption from the 5 percent risk retention requirement to include a wide variety of traditionally safe, well-underwritten products,” said Phipps. “Congress chose not to include a high down payment among the criteria it specified in the Dodd-Frank Act. A poor QRM policy that does not heed their intentions will only increase the cost and reduce the availability of mortgage credit.”