News Releases

Thursday, March 3, 2011

Isakson to Federal Regulators: Shutting Out Highly Qualified Homebuyers Would Be a Disaster for Recovery of American Housing

WASHINGTON - U.S. Senator Johnny Isakson, R-Ga., who spent more than three decades in the real estate industry, on Wednesday cautioned federal regulators who are drafting eligibility rules for the newly enacted Qualified Residential Mortgage against requiring a large down-payment that will shut out too many potential homebuyers and prolong the recovery for the nation's housing market.

Isakson spoke on the Senate floor to reiterate to Sheila Bair, chairman of the Federal Deposit Insurance Corporation (FDIC), and other federal regulators that he is very troubled by recent suggestions that they might be considering requiring a down-payment as large as 20 percent for a homebuyer to be eligible for the Qualified Residential Mortgage while failing to address the issue of private mortgage insurance. Isakson, along with Senators Mary Landrieu, D-La., and Kay Hagan, D-N.C., authored the Qualified Residential Mortgage provision of the Wall Street Reform and Consumer Protection Act, also known as the "Dodd-Frank financial reform bill," that was signed into law on July 21, 2010.

Isakson's mortgage requires lenders to fully document a borrower's income and assets, verify that they have acceptable debt-to-income ratios and are capable of repaying their loans. Mortgages that meet the Qualified Residential Mortgage definition will be exempt from the risk-retention requirements of the Dodd-Frank law, thereby providing an incentive for lenders. In turn, borrowers with these mortgages could avoid the added costs that would trickle down to them from their lender, thereby benefiting all parties involved.

"We are at a critical time in our recovery. The housing market has hit the bottom but it is showing some signs of coming back. Now would be the worst time to send a signal that mortgage money is going to be harder to obtain for highly qualified homebuyers," said Isakson. "Requiring a 20 percent down-payment is not only unreasonable for highly qualified homebuyers but it would force the banks to hold 5 percent risk retention oneven the best of loans. Worst of all, it would give the American people only one alternative for lending, the Federal Housing Administration, which is already burdened and could create the situation for another collapse. I urge regulators to be thoughtful in determining what the parameters will be for a Qualified Residential Mortgage."

On Feb. 16, 2011, Isakson, Landrieu and Hagan sent a letter urging the FDIC, the Secretary of Housing and Urban Development, and the director of the Federal Housing Finance Agency to adhere to the framework designed in the legislation for the Qualified Residential Mortgage.

On February 17, 2011, Isakson expressed similar concerns to Sheila Bair, chairman of the Federal Deposit Insurance Corporation (FDIC), during a Senate Banking Committee hearing.

Isakson spent more than three decades in the real estate business, beginning his business career in 1967 when he opened the first Cobb County, Ga., office of a small, family-owned real estate business, Northside Realty. Isakson later served as president of Northside for 20 years, presiding over the company's growth into the largest independent residential real estate brokerage company in the Southeast and one of the largest in America.