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REcolorado

Government Affairs Monthly Report

03-1-2020

Limiting Statewide Growth: Initiative #122

Four petition firms have registered to gather signatures to put Initiative 122 on the November ballot, according to the Secretary of State's Office. Proponents have until June 5th to gather at least 150,000 valid signatures.

If you are approached and asked to sign a petition, please be aware of and fully understand what it is that you're signing. Initiative 122 would arbitrarily cap housing permits in 11 Front Range counties. This type of limit on the percentage of houses, apartments, townhomes, condos or that can be built would raise the cost of housing. As any economic course will tell you, when proposed policy would limit the supply of housing the end result drives up the price of homes for everyone. If passed by Colorado voters, Initiative 122 will devastate any efforts to build the affordable housing that Colorado desperately needs to meet the demands of our workforce and civil servants.

If this gets on the ballot for November it could allow for example, Pueblo to decide for Greeley how many houses they should build each year. In Colorado we have a strong tradition that local decisions should be made locally. Shouldn't all Coloradans have the opportunity to buy an affordable house rather than only allowing the people who already own a home to be the only ones able to pursue the American dream?

NAR and Coalition Request Delay from Regulators

NAR led a coalition of more than 35 associations to send a letter to the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (FED), the Federal Deposit Insurance Corporation (FDIC), the Securities and Exchange Commission (SEC), the Federal Housing Finance Agency (FHFA), and the Department of Housing and Urban Development (HUD), requesting a delay in their review of the qualified residential mortgage rule.

In the wake of the financial crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. The law affects housing finance in two ways. First, it makes originators liable to prove that a borrower/recipient can afford the mortgage they originate under the ability to repay (ATR) rule and an exemption to the ATR called the qualified mortgage rule (QM). Second, it forces securitizers of mortgages to maintain sound capital and quality standards for the mortgages they bundled and sell to investors under the qualitied residential mortgage rule (QRM).

The QRM rule, the focus of this coalition letter, requires securitizers to hold an increased amount of capital if the loans they securitize are of a lower quality. As a result, borrowers who use non-QRM mortgage typically face higher rates and limited access.

To avoid higher costs and market disruptions, regulators created a broad measure of safe loans in the QM rule and then set QRM equal to QRM, so that the majority of mortgages were high quality and could be bundled into QRM-eligible securities. This alignment has maintained low costs and good access for the majority of the market.

Earlier this year the regulators announced their intent to review and update the QRM. However, the CFPB is reviewing the QM rule and announced a delay. Because the QRM rule depends on the QM rule, NAR and the co-signers have asked the regulators to delay their review of the QRM until the CFPB completes its review of the QM and finalizes any changes.

CFPB Plans for New Compliance Aids

The Consumer Financial Protection Bureau (CFPB) recently published a policy statement announcing a new category of Bureau guidance, known as “Compliance Aids” aimed at improving clarity on requirements of existing rules and statutes. As advocated for by NAR, helpful compliance resources like this that can be reasonably relied upon are needed by the industry to achieve statutory and regulatory objectives for the broader benefit of consumers.

While there is no requirement to follow a Compliance Aid, these resources will include “practical suggestions for how entities might choose to go about complying” with specific rules and statutes. Alternative ways to fulfill statutory and regulatory obligations are still permissible, as the Aid may not be exhaustive of all compliance methods. Notably, when exercising its enforcement and supervisory discretion, the Bureau does not intend to sanction, or ask a court to sanction, entities that reasonably rely on Compliance Aids.

The Bureau’s announcement is welcomed as there is always a need for additional support and clarity on methods for compliance. NAR will continue to engage with the CFPB in their development of the Compliance Aids, which includes potential reissuing of existing materials.