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The following Letter Type E, or variations thereof, was submitted by individuals or entities.

Letter Type E:

U.S. Department of Housing and Urban Development Washington, DC

Subject: Credit Risk Retention (Document ID HUD-2011-0056-0001)

Dear U.S. Department of Housing and Urban Development,

I am writing this letter to voice my concerns with the proposed Risk Retention and Qualified Residential Mortgage (QRM) rule.

When a person buys a house, there is a significant cash investment required. This includes a down payment, closing costs (typically 3-5% of the loan amount), and other costs. By requiring a down payment of 20% or more and creating unduly tight credit standards to qualify for a QRM, you will be placing home ownership out of reach for millions of potential buyers and crippling an already fragile housing recovery. Experts advise that non-QRM loans will cost consumers much more than QRM loans meaning many potential home owners will either pay more needlessly or be excluded from achieving the American Dream.

Based on 2010 estimates of median income and home prices from the National Association of REALTORS® and the 2010 national savings rate, it would take 9.5 years for the typical American family to save enough money for a 10 percent down payment and closing costs, and fully 16 years to save for a 20 percent down payment and closing costs. A 10 or 20 percent down payment requirement for the QRM means that even the most creditworthy and diligent first-time homebuyer cannot qualify for the lowest rates and safest products in the market. As a result, responsible consumers who maintain good credit and seek safe loan products will be forced into more expensive mortgages under the terms of the proposed rule simply because they do not have 10 or 20 percent or more in down payment or even more equity for refinancing.

Weak underwriting and toxic mortgages are the main cause of mortgage defaults, not well-underwritten mortgages that allow for low down payments. Requiring a higher down payment and rigid credit standards does little to reduce risk of default, but rather creates unnecessary barriers for responsible consumers looking to purchase or refinance a home. I strongly encourage you to define QRM based on sound underwriting and safe mortgage products, not criteria that do little to increase safety but that deny millions of Americans access to the best mortgages.




Modified: 08/05/2011