The reelection victory of President Barack Obama over Republican challenger former Massachusets Governor Mitt Romney means initiatives begun in the last four years to address past housing market excesses and help boost the market recovery, including proposed Dodd-Frank banking rules and reform of the secondary mortgage market, could command attention going into the president’s second term.
In his acceptance speech from Chicago delivered after midnight, President Obama said he hoped to meet with Gov. Romney in the coming weeks to explore how the two could work together to move the country forward. He also called for immigration reform and vowed action on two Republican priorities, tax reform and deficit reduction.
“I am looking forward to reaching out and working with leaders of both parties to meet the challenges we can only solve together,” President Obama said. “Reducing our deficit, reforming our tax code, fixing our immigration system, freeing ourselves from foreign oil — we’ve got more work to do.”
The Obama administration two years ago released a white paper that contained options on reforming secondary mortgage market companies Fannie Mae and Freddie Mac, raising the possibility that reform of these companies, which have been in conservatorship for much of Obama’s term of office, could come under consideration in the new Congress.
NAR reports that it supports reforms that would pave the way for a return of private lenders into the mortgage market while maintaining an explicit, government-chartered, nonprofit federal presence in the market to ensure mortgage availability in good times and bad.
Similarly, important rulemaking by the Consumer Financial Protection Bureau to protect against future mortgage lending abuses, is slated to come to a head in early 2013. NAR has expressed concern with the approach in two of the rules, the qualified mortgage (QM) and qualified residential mortgage (QRM) rules.
The QM rule sets standards for lenders to ensure they make loans only to borrowers who have the ability to repay, and QRM requires lenders who originate loans for securitization retain 5 percent of the value of the loans unless they meet prescribed underwriting standards. In both cases, NAR has called for the rules to give flexibility to lenders in meeting consumer protections; otherwise pricing could put mortgage financing outside the reach of households of all but those with the strongest credit records.
In the presidential election campaign, Gov. Romney singled out QM as an example of a Dodd-Frank rule that was already hurting the market and raising the cost of mortgage financing because of the uncertainty it was causing, and he had vowed to reform it in a market-friendly way. It’s unclear under a second Obama administration how much the final versions of the QM and QRM rules will look like their proposed forms.
In the near term, NAR reports that it will be advocating for the extension of mortgage cancellation relief, which was enacted in 2007 to exempt underwater home owners of taxation on mortgage debt forgiven by a lender in a modification or distressed sale. The tax forgiveness expires at the end of 2012 and could be taken up before the end of the year, when the current Congress adjourns.