President Barack Obama in his first State of the Union speech since winning election to a second term said the federal government needs to streamline rules that are making home purchases and mortgage refinances too hard for creditworthy households. He also urged Congress to tackle tax reform, despite all the other priorities on its agenda, and he said homes and commercial buildings must be part of the country’s effort to improve energy efficiency.
The President also touted his initiative to help rebuild communities hard hit by the economic slowdown by incubating new businesses and working with public and private partners to rebuild vacant homes.
“Our housing market is healing […] and homeowners enjoy stronger protections than ever before,” the President said at the beginning of his speech. But among the country’s unfinished business, he said, is the continuing difficulty among households to get mortgage credit.
“Even with mortgage rates near a 50-year low, too many families with solid credit who want to buy a home are being rejected,” the President said. “Too many families who have never missed a payment and want to refinance are being told no. That’s holding our entire economy back, and we need to fix it.”
Obama pointed to legislation pending in Congress to encourage refinancing by underwater and other struggling borrowers who’ve remained current on their mortgage. The legislation “would give every responsible homeowner in America the chance to save $3,000 a year by refinancing at today’s rates,” Obama said. “Democrats and Republicans have supported it before. What are we waiting for? Take a vote, and send me that bill.”
There are a number of mortgage refinance bills pending in Congress, including the “Responsible Homeowners Refinancing Act” by Sens. Robert Menendez (D-N.J.) and Barbara Boxer (D-Calif.) to streamline refis of Fannie Mae and Freddie Mac loans, and a bill to let struggling borrowers refinance into FHA loans, among others.
Obama also echoed real estate industry concerns over the qualified mortgage (QM) and qualified residential mortgage (QRM) rules, which federal banking regulators have been working on since passage of the big Wall Street reform law that was enacted two years ago. QM was issued earlier this year and lays out broad-based lender requirements to ensure loans are made only to borrowers who can reasonably be expected to meet repayment obligations. QRM is still to be released. It sets additional restrictions on lenders for loans that would be packaged into mortgage backed securities and sold to investors. NAR and other industry and consumer groups back broad-based, flexible standards and remain concerned that QRM restrictions that go beyond QM could keep the availability of mortgage credit too tight.
“Right now, overlapping regulations keep responsible young families from buying their first home,” Obama said. “What’s holding us back? Let’s streamline the process, and help our economy grow.”
Read the full article at Realtor.com.