Friday, May 27, 2011

Landrieu, Isakson, Hagan Urge Regulators
to Give Families Access to Affordable Mortgages

WASHINGTON, D.C. – U.S. Senators Mary Landrieu (D-LA), Johnny Isakson (R-GA) and Kay R. Hagan (D-NC) today led a bipartisan group of 39 Senators in urging federal regulators to avoid restricting credit to middle class families working to own a home. The letter asks regulators to follow the legislative intent of a Qualified Residential Mortgage (QRM) provision the Senators included in the Dodd-Frank financial reform law.

Landrieu, Isakson and Hagan worked together to include a provision exempting Qualified Residential Mortgages (QRM) from a requirement in Dodd-Frank that requires originators to retain at least a 5 percent interest in loan pools, known as "risk retention," sold to investors.

In contrast to the amendment's express intent – and despite repeated warnings from members of Congress, consumer groups, and bankers – regulators in March issued a proposed rule requiring QRMs to include a 20 percent down payment.

"The proposed regulation goes beyond the intent and language of the statute by imposing unnecessarily tight down payment restrictions," the Senators wrote. "These restrictions unduly narrow the QRM definition and would necessarily increase consumer costs and reduce access to affordable credit. Well-underwritten loans, regardless of down payment, were not the cause of the mortgage crisis."

Landrieu, Isakson and Hagan intentionally did not include a rigid down payment requirement in the provision to ensure that creditworthy, qualified buyers could access mortgages with reasonable down payments.

"The extensive additional requirements for QRMs in the proposed rule swing the pendulum too far and reduce the availability of affordable mortgage capital for otherwise qualified consumers," the Senators wrote. "Many borrowers would simply be forced to pay much higher rates and fees for safe loans that nevertheless did not meet the exceedingly narrow QRM criteria. Sadly, in many cases, some creditworthy borrowers may not be able to get a mortgage at all."

The letter was also signed by Senators Saxby Chambliss (R-GA), Mike Enzi (R-WY), Bob Casey (D-PA), Jeff Sessions (R-AL), Roy Blunt (R-MO), John Hoeven (R-ND), Chris Coons (D-DE), Thad Cochran (R-MS), Ron Wyden (D-OR), Mike Crapo (R-ID), Mark Pryor (D-AR), John Barrasso (R-WY), Max Baucus (D-MT), Tom Carper (D-DE), Jeanne Shaheen (D-NH), Robert Menendez (D-NJ), Kent Conrad (D-ND), Claire McCaskill (D-MO), Scott Brown (R-MA), Richard Blumenthal (D-CT), Sheldon Whitehouse (D-RI), Daniel Akaka (D-HI), Debbie Stabenow (D-MI), Ben Nelson (D-NE), Jon Tester (D-MT), John Boozman (R-AR), Herb Kohl (D-WI), Mark Udall (D-CO), Jeff Merkley (D-OR), Bernie Sanders (I-VT), James Risch (R-ID), Michael Bennet (D-CO), Mark Begich (D-AK), Richard Burr (R-NC), Joe Lieberman (I-CT), and Lindsey Graham (R-SC).

The full text of the letter can be read here.