He says nearly two-thirds of Americans own their homes, and according to he Federal Reserve, 81 percent of renters would like to join them. Unfortunately, half of them do not have the down payment, and nearly a third do not think they would qualify for a mortgage.
Keating recounts hearing of a young father in Montana who was denied a $16,000 loan to buy a manufactured home. He had a well-paying job, but he had not been working long enough to document his income that would satisfy rules set by the Consumer Financial Protection Bureau.
In another instance, a doctor, who had just acquired a private medical practice and thus became self-employed, could not be qualified to buy a home because his profile did not fit the mortgage rules.
If banks can hold these kinds of loans in their own portfolios instead of selling them on the secondary market, they would take the risk after making sure the loans were properly underwritten.
He says, “One reasonable reform that would help customers get a step up in housing would be to provide portfolio mortgages with the legal protections of “Qualified Mortgage” status. Banks are willing to take on the credit risks of these loans—but the legal risks imposed by excessive regulation and penalties for lending outside of the QM box are what prevent bankers them from making them.”
A financial reform bill introduced by Sen. Richard Shelby (R-Ala.) will expand portfolio lending, and would resolve situations like the two mentioned above, as MHProNews understands. ##
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