As a member of the Coalition for Sensible Housing Policy, we wanted to pass along a recent Press Release following comments from Rep. Barney Frank (D-MA).

(Washington, DC) – The following statement was issued by the Coalition for Sensible Housing Policy in response to remarks made this morning by Rep. Barney Frank (D-MA):

Risk retention is an appropriate policy when it targets risky loan features.  Because across-the-board risk retention would impose additional costs on responsible, creditworthy borrowers, legislators also created an exemption for “Qualified Residential Mortgages (QRM).”

The QRM was intended to include mortgages with product features and sound underwriting standards that have been proven to reduce the risk of default.  The statistics are clear and safe, stable mortgage products – using full documentation, verified income and assets, and mortgages without exotic and unstable features – are the best way to reduce default risk.

Down payments are a factor in loan performance, but the most important factor is strong and documented underwriting and sensible loan features.

Requiring a 10 or 20 percent minimum down payment in addition to strong underwriting would raise the cost and reduce the availability of mortgages for creditworthy families without the wealth or savings for a down payment, but do so with only minor improvements in overall default rates. The Coalition believes this is an unnecessary trade-off that would have a disproportionate impact on moderate income and minority families.

An unduly narrow QRM definition will jeopardize the already fragile housing recovery. President Obama acknowledged on July 6th that the housing crisis has “probably been the area that’s been most stubborn to us trying to solve the problem.”

The Coalition supports requiring securitizers of mortgages without sound underwriting or with unstable features to retain risk.  We urge policy-makers toredesign a QRM that will support – not hinder – the housing recovery, attract private capital and minimize future defaults without shutting responsible borrowers out of the housing market.

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The Coalition for Sensible Housing Policy

American Bankers Association

American Escrow Association

American Financial Services Association

American Land Title Association

American Rental Property Owners and

Landlords Association

Asian Real Estate Association of America

Black Leadership Forum

Center for Responsible Lending

Colorado Mortgage Lenders Association

Community Associations Institute

Community Mortgage Banking Project

Community Mortgage Lenders of America

Community Reinvestment Coalition of North Carolina

Consumer Federation of America

Council Of Federal Home Loan Banks

Credit Union National Association

Enterprise Community Partners, Inc.

HomeFree USA

Independent Community Bankers of America

International Association of Official Human Rights Agencies

Louisiana Bankers Association

Mortgage Bankers Association

Mortgage Insurance Companies of America


National Association of Federal Credit Unions

National Association of Hispanic Real Estate Professionals

National Association of Home Builders

National Association of Human Rights Workers

National Association of Neighborhoods

National Association of Real Estate Brokers

National Association of REALTORS®

National Community Reinvestment Coalition

National Fair Housing Alliance

National Housing Conference

National NeighborWorks Association

National Urban League

National Real Estate Investors Association

North Carolina Institute for Minority Economic Development

Real Estate Services Providers Council

Real Estate Valuation Advocacy Association

Realty Alliance

Texas Bankers Association

U.S. Conference of Mayors

Worldwide ERC