Qualified Residential Mortgages: Down Payment Rules Threaten Home Buyers—and the Economy
Finding the Right Balance
Lack of underwriting, not low down payments, caused the current crisis. Strong underwriting is the best way to rein in risky loans—and Dodd-Frank already requires this.As part of implementing the Dodd-Frank financial reform bill, federal regulators are charged with defining a “Qualified Residential Mortgage” or QRM. Government proposals have called for down payments up to 20% on QRM loans, but new research shows that mandating large down payments would be a mistake for business and consumers.
Analyzing nearly 20 million mortgages made between 2000 and 2008, the Center for Community Capital and CRL find QRM mortgages requiring a 10% down payment would lock 40% of all creditworthy borrowers out of the market. A 20% down payment would exclude 60% of creditworthy borrowers. See “Balancing Risk and Access: Underwriting Standards for Qualified Residential Mortgages;”read the full report and press release.
Additional Resources
- The Negative Impact of a Government-Mandated 10% Down Payment (issue brief)
- A Government-Mandated 10% Down Payment: Bad for Families, the Housing Market and the Economy (1 page)
- Letter to Regulators Opposing a Mandated 10% Down Payment (submitted by CRL and six other organizations)
- This Coalition for Sensible Housing Policy white paper explains why mandated down payments aren't necessary.
- Locked Out of a Home: The Impact of a 10% Down Payment Requirement on Prospective Home Buyers (CRL issue brief)
- Don’t Mandate Large Down Payments on Home Loans (CRL issue brief)
- Coalition for Sensible Housing Policy Joins 326 Members of U.S. Congress Calling for Changes to Proposed QRM Regulations (Press release)
- Joint Letter to Regulators Against High Down Payment Requirements
- "Reworking Risk Retention," a special report by Mark Zandi, Chief Economist, Moody's Analytics.
- Coalition for Sensible Housing Policy June 22 press release
Published: August 31, 2012
