QRM Yet Another Federal Blunder In Fixing The Housing Market
June 8, 2011 by admin
QRM – Qualified Residential Mortgages is probably the dumbest idea the government has rolled out in the past 24 hours. An idea whose origination stems from the colossal collapse of the economy and U.S. housing markets would ensure the collapse of the American Real Estate Market. The simple economics of removing 30-40 of potential home buyers from a struggling real estate market should be enough to slow down the passage of this new financing regulation, but given the governments track record in analyzing and helping housing, anything is possible. The same geniuses that brought us the making home affordable, hope for homeowners, hamp and other alphabet soup scenarios for keeping borrowers in hopes that we part of a ridiculous bubble are only going to further destroy home values in what is a weakening U.S. economy.
While the lobbyist from the real estate association, mortgage bankers association and numerous other parties are pointing out the fallacy in the latest proposal, its the common disconnect between main street america and the corporate/government world that appears to be growing further apart. The QRM’s idea of keeping debt to income ratios in line is perfectly legitimate, requiring borrowers to fork over a 20% down payment is the big issue that would ensure the collapse of the real estate market. The fact that the 8 million folks lost their jobs over the last three years, income growth is stagnant at best, energy costs are surging will make saving towards a 20% down payment an almost unachievable goal.
The key to fixing the housing market is really based on simple economics, supply vs demand. Increase the demand for housing by providing the best financing options to qualified buyers. Force the government bailed out banks who played casino roulette with derivatives, forged millions of docs in mers and had zero underwriting guidelines in place for their mortgage divisions to reduce the balance of home mortgages to today’s market values. This is the only realistic way housing is ever going to get turned around and avoid the pressure that is mounting on middle class america to walk away/short sale their properties in order to see the light at the end of the tunnel financially.