Qualified Buyers Should Have Access to Credit, Say REALTORS®
NEW ORLEANS, November 08, 2010 - The National Association of REALTORS® urges the mortgage lending industry to reassess and amend their policies so more qualified home buyers can become home owners. NAR's Board of Directors adopted this policy today during the 2010 REALTORS® Conference & Expo.
"REALTORS® believe in a responsible, sustainable model for home ownership, and current credit policy restrictions are not conducive to that model," said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. "The Federal Housing Administration, Fannie Mae and Freddie Mac have a mission to provide mortgage liquidity to qualified home buyers, including low- and moderate-income families and first-time home buyers. That mission is being impaired by unnecessarily restrictive limits on the availability of credit, and these extremely tight credit policies are significantly delaying a housing market and economic recovery."
Currently, FHA, Fannie Mae and Freddie Mac account for more than 90 percent of the mortgage market. Lenders refuse to make loans unless FHA will insure them or the GSEs will buy them. Stricter FHA and GSE underwriting rules eliminate many buyers with credit scores as high as 750, and lenders are imposing credit overlays of their own, restricting the availability of credit.
"Under current practices, many would-be home buyers who could responsibly, affordably become home owners are unable to do so," said Golder. "NAR wants to ensure that anyone who is able and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream."
As part of its credit policy to increase mortgage lending to qualified borrowers, NAR will develop educational materials for REALTORS® and consumers about credit issues, including the importance of good credit, lender credit policies, and how to find a fair and affordable mortgage.
NAR will also work with FHA, the GSEs, lenders and federal regulators to encourage them to assess their credit policies on a regular basis, and will urge them to re-evaluate their policies regarding which home owners can qualify for loan modifications, short sales, or deeds-in-lieu of foreclosure to help more home owners keep their homes or, when that is not possible, help them begin to rebuild their credit.
In addition, NAR made a series of recommendations to FICO Corp. and lenders to amend certain rules on the utilization of credit and how negative credit scores affect future home purchases, and to change how they report and treat loan modification and payment plans. Other recommendations include making credit scores and credit reports available to borrowers against whom adverse action has been taken, and conducting research on the impact of credit policies on underserved groups.
"Home ownership matters - to individuals, families, communities and our nation's economy," said Golder. "Ensuring reasonable access to affordable credit is an important part of NAR's efforts on behalf of anyone who aspires to the American Dream of owning your own home."
*The National Association of REALTORS®, "The Voice for Real Estate," is America's largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.