Anticipated Impact of QRM Proposal Increasingly Glum

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The proposal of a 20 percent down payment under the Dodd Frank Act has been regarded as potentially detrimental, with many lawmakers worrying that first-time homebuyers will be locked out from buying a home; new information, presented at Capitol Hill on Wednesday, shows that the proposal will also impact existing homeowners, not just first-time homebuyers.

The current proposal states that a borrower needs to hold 25 percent equity in the home to qualify for refinancing into a QRM loan, as well as at least 30 percent equity for a QRM cash-out refinance loan, said Housing Wire.

Two out of three homeowners would not have the necessary 25 percent equity to refinance in the following states: Nevada, Arizona, Georgia, Florida and Michigan, according to CoreLogic.

Nevada would be the worst off, with 83 percent of homeowners in the state unable to refinance, followed by Arizona with 72 percent.

Additionally, six out of 10 would be unable to move out of their home and afford the 20 percent down payment.

“In effect, the proposed QRM would penalize families who have played by the rules, scraped each month to pay their bills, kept their credit clean, and saved for a modest down payment,” according to a study from consumer and industry groups, said Housing Wire.

The comment period for the proposal has been extended to August 1.

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