Both realtors and consumers may feel the burden of the Dodd-Frank Act and recent regulations proposed by the Federal Reserve thanks to new regulations on mortgage requirements.
The qualified mortgage, qualified residential mortgage and Basel III regulations that are currently under consideration are stymieing lenders Fannie Mae and Freddie Mac, RealtyToday.com reports.
National Association of Realtors Real Estate Services Director Ken Trepeta said that the new appointed regulations can quickly change views on homeownership and shut down the finance market to a large portion of homebuyers.
“If the ability-to-repay rules of QM are written too narrowly, it would tighten credit even more for all but the most credit-worthy buyers,” Trepeta said, according to RealtyToday.com. “As for QRM, if the rule requires a minimum down payment of 20 percent, much of the first-time buyer market outside of FHA would simply disappear.”
Trepeta addeded that Basel III’s risk-weighting requirements would give no other options to bankers but to hold more capital for almost all loans, making loans more expensive and hard to get for consumers.
“If regulators do the wrong thing on any one of these issues, he result could be a ticking time bomb for the housing recovery we are just beginning to see,” Trepeta said, RealtyToday.com reports. “Even if regulators get it right, credit overall will likely be tighter. If they botch it, it could be disastrous.”