Diverse Group Calls on CFPB to Create Broad QM Market - Narrow QM Would Harm Consumers and the Housing Recovery

WASHINGTON, April 17- A diverse group of 33 lenders, housing professionals, consumer advocates and civil rights organizations came together today to call on the CFPB to issue broadly defined and clear Qualified Mortgage (QM) standards as part of the forthcoming Ability to Repay regulation.

The organizations wrote to Richard Cordray, Director of the Consumer Financial Protection Bureau, that a narrowly defined QM would undermine prospects for a housing recovery and threaten the redevelopment of a sound mortgage market.

"Congress intended that all creditworthy borrowers - especially low- and moderate-income borrowers and families of color - should be extended the important protections of a QM ... A broad QM, which includes sound underwriting requirements, excludes risky loan features, and gives lenders reasonable protection against undue litigation risk, will help ensure revival of the home lending market."

Federal Reserve Chairman Ben Bernanke, other regulators and many private sector economists and housing market analysts have highlighted the fact that today's underwriting standards are too restrictive and are holding back a housing recovery. A narrowly constructed definition of Qualified Mortgages would further tighten credit, and harm consumers, curtail lending and jeopardize the fragile housing recovery.

- Consumers - Many of today's loans and borrowers would be forced into the non-QM market, which will be far costlier, burdening families least able to bear the expense. Furthermore, these higher-priced loans would not be required to include important protections against the loan features that drove the highest failures in the mortgage boom.

- Lending - If more borrowers are forced into the non-QM market, lenders and investors will be at greater risk of violating ability to pay violation and anti-steering rules. As a result of these increased risks, these loans are either less likely to be made or else made at increased cost to consumers.

- Housing market - If the parameters of the QM are not clear, risks become unpredictable, forcing lenders to decrease their risk tolerance and operate well within the standards. Such an outcome will lessen both the availability and affordability of credit for far too many borrowers.

"Creating a broad QM, which includes sound underwriting requirements, excludes risky loan features, and gives lenders reasonable protection against undue litigation risk, will help ensure revival of the home lending market," wrote the organizations.

The following organizations signed on to the letter, which is available at http://www.ksefocus.com/billdatabase/clientfiles/172/3/1480.pdf

1 American Bankers Association

2 American Escrow Association

3 American Financial Services Association

4 American Land Title Association

5 American Securitization Forum

6 Asian Real Estate Association of America

7 Center for NYC Neighborhoods

8 Community Associations Institute

9 Columbus Housing Partnership

10 Community Mortgage Banking Project

11 Community Mortgage Lenders of America

12 Consumer Bankers Association

13 Consumer Mortgage Coalition

14 Financial Services Roundtable

15 Habitat for Humanity International

16 Housing Policy Council

17 Independent Community Bankers of America

18 Leading Builders of America

19 Mortgage Bankers Association

20 Mortgage Insurance Companies of America

21 National Association of Hispanic Real Estate Professionals

22 National Association of Home Builders

23 National Association of Mortgage Brokers

24 National Association of Neighborhoods

25 National Association of Real Estate Brokers

26 National Association of Realtors®

27 National Community Reinvestment Coalition

28 National Council of State Housing Agencies

29 National Housing Conference

30 Real Estate Services Providers Council, Inc. (RESPRO®)

31 Real Estate Valuation Advocacy Association

32 The Appraisal Institute

33 The Realty Alliance

Homeownership Can Bring Big Savings at Tax Time

As the April federal income tax filing deadline approaches, millions of Americans are sitting down and sorting through dozens of forms to determine how much money they owe Uncle Sam – or, how much of a refund they will get this year. One of those forms, the Mortgage Interest Statement Form 1098, can mean big savings for home owners at tax time.

 

 

Form 1098, which home owners receive from their lenders, shows the total amount of home mortgage interest paid during the year. Home owners who itemize their federal income tax deductions can deduct 100 percent of their mortgage interest payments on a first or second home for up to $1 million of mortgage debt. They can also deduct the interest paid on up to $100,000 of home equity loans.

For most home owners, this means they can deduct ALL of the mortgage interest they’ve paid on their home each year.

 

The ability to deduct home mortgage and home equity loan interest isn’t the only tax benefit for home owners.

 

The three most important sources of tax savings for home owners are:

1. Deductions for mortgage interest
2. Deductions for real estate taxes
3. The capital gains exclusion for the sale of a principal residence

Home owners are also able to deduct the state and local real estate taxes they pay each year on an owner-occupied home.

When it is time to sell a home, in many cases home owners don’t have to pay capital gains tax on the profit from the sale. Under present law, married couples who have owned and occupied their principal residence for at least two of the past five years do not have to pay any taxes on the first $500,000 in profits from the sale of their home. Single filers earn up to $250,000 tax free.

Another deduction home owners may be able to take is for mortgage insurance premiums. Generally, people who purchase a home without putting 20 percent down have to buy mortgage insurance, and those premiums can also be deducted from taxable income.

Even home owners who don’t use the home as their principal residence and rent it out may be able enjoy some tax benefits, including interest and depreciation deductions.

Buying a home offers tax savings that can add up to tens of thousands of dollars over several years. Home owners rely on the mortgage interest deduction each year to help offset the costs of homeownership and prospective buyers take the deduction into consideration when choosing homeownership over renting.

But the mortgage interest deduction, which has been included in the tax code for about 100 years, is in danger. A national deficit commission has proposed reducing or eliminating the deduction as part of a restructuring of the tax code.

Find out more about the threat to the mortgage interest deduction, and read “The Tax Benefits of Homeownership,” a study from economists at the National Association of Home Builders that provides specific examples of savings for a variety of income levels and ownership situations, at www.SaveMyMortgageInterestDeduction.com.

Contact the Home Builders Association of the Grand Traverse Area for more information at 231.946.2305 or visit their web site at www.hbagta.com.