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c;:""-' I :;,:':;:V N C.l =1~ P1:Y' :z::.,.May 31, 2011 ~.:. Z :J:!:c;. • fTl<.n

Ms. Mary L. Schapiro, Chairman Mr. Bcn S. Bernanke, Chairman c~_.­

U.S. Securities and Exchange Commission Board or Governors orthe FedenfI1{ese,:;i(l 100 F Street, NE 20'10 Street and Constitution Aven'llc, NW Washington, DC 20549 Washington, DC 20551

Ms. Sheila C. Bair, Chairman Mr. Edward DcMarco, Acting Director Federal Deposit Insurance Corporation Federal Housing Finance Agcncy 1776 F Street, NW 1700 G Strcct, NW, 4'10 Floor Washington, DC 20006 Washington, DC 20552

Mr. John Walsh, Acting Comptroller Mr. Shaun Donovan, Sccrctary Ollicc orthe Comptroller or the Currency U.S. Department of Housiug and Urban Development 250 E Street, SW 45 17th Street, SW Washington, DC 20219 Washington, DC 20410

Dear Chairman Schapiro, Chairman Bernanke, Chairman Bair, Acting Director DeMarco, Acting Comptroller Walsh, and Sccrctary Donovan:

We are writing concerning your notice of proposed rulemak.ing on thc regulations to implement Section 941 of the Dodd-Frank Act which includcs dcfining a Qualificd Rcsidential Mortgage (QRM) that will be exempt hom the Act's risk retention requirements. We strongly urge you in this process to considcr lower down payment loans that havc mortgage insurauce (Ml) as constituting a QRM.

Scction 941 of the Dodd-Frank Act spccifically namcs "mortgage guarantee insurancc" as one of thc filCtOfS to be included in thc QRM definition. The law recognizes that private capital does not exclusively come from a lender or an invcstor; it can be provided by a private mortgage insurer. The QRM regulations should reflect this important reality, which was Congress' intent in clarifying this point in the Act. As we seek to ensurc sustainable home ownership supported by the private sector, it should not go unuoticed that loans wilh private mortgage insurance default less often than uninsured loans. Morlgage insurers provide additional scrutiny on a loan application, supplementing the lender's review. In addition, mortgage insurers havc wcll-cstablished procedures that have been shown to mitigate and cure loan deficiencics. These safeguards protect lenders and investors while keeping filmilies in their homes. This is important to consider as we seck ways to create sustainable home ownership opportunities for Americans through the private sector with less reliance on government­supported mortgage finance products.

PiltlHEO ON IlEC','CLLD I'M'EFl

Thc proposal to rcquirc a minimum 20 perccnt down paymenl rcquircmcnt undcr thc QRM dcfinition would rcducc Ihc availability of affordablc mortgagc capital for olhcrwise qualificd consumers. In fact, in 2009 whenundcrwriting standards had already becn significantly lightened, the majority of homcs wcre purchased with Icss lhan a 20 perccnt down paymcnt. An unncccssarily strict QRM delinition would particularly harm firsl-limc and minority homebnyers. Crcditworlhy lirsl-time homebnyers wonld be priced oul of the markct, as evidenccd by a survey by thc National Associalion of Rcaltors thai found in 20 I0, 86 percent of lirst-Iime homcbuyers made down paymenls bclow 20 percent. Thc resultant reduction in demand lor housing, duc to an overly burdensome govcrnmcul dictatc, would only add to the challenges thc housing market Iflces, and could thrcatcn a fll11-flcdged economic recovcry from years to come.

Glher ovcrly proscriptive clcments of the proJlosal regarding crcdit history are bcst left in the contcxt of establishing broad underwriting standards and principles. Wc arc conccl'l1cd, for cxample, that thc proposed rcgulation establishcs overly-narrow dchl-Io- income guidclines last seen morc than a gcncration ago that would furl her rcduce access 10 crcdit lor a broad rangc of Americans. Furthermore, this could have thc unintcndcd consequence of pushing borrowers to Federal I-lousing Administration (FI-/A) insurcd loans. The FI-IA is already playing 100 large of a role in mortgage market and we should not institute policies that could cxaccrbatc lhe problem.

We urge you to revise thc proposcd rulc to reOccl the intcnt of Congress by including prudcnlly underwrittcn privately insurcd loans within thc QRM definition. Wc thank you lor your consideration and look lorward to your timely responsc.

Sincerely,

t3J~----Rep. Brad Shcrman

~ nil nll1Vllill\L C~ ~~~ Moore Capito

t . .Iamcs A. (Iimcs

2

~~. Rep. Ro crt E. Andrews

ep. Joe Baea

Rep. S nford D. Bishop,

/i'~ftJO Bonner M-­

Rep.F uico" Canseco

~EA~ ~ROlrerl B. Aaeiliolt .

z(J~· Rep. Sieve Austria

Rep. Charles F. ass

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L.>~Q~ Rep. Russ Cama 1811

~eIIf! Rep. Jason Chaffctz

Rep. Gemld E. COIUlolly

Rep. Mark S. Critz

Rep. Geoff Davis

-lOS4 j)"t.jf1MA.ifRep. Rosa L. DeLaura

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~~Lo*-Rep. Marcia L. Fudge

Ai Rep. Gene Green

Rep. Vieky H Izleru«~~

Rep Michael G. Grimm

&/­Rep. Alcee L. Hastings

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~'1(.~ I!t::b=JUiRep. Mazie K. Hirano

~Rep. Duncan Hunter

Rep. Bill Jo SOilRe~,~ ~

l /;;Kf4-----.....~ Rep. Adam Kinzinger

Rep. Daniel Lipinski

6

g/~~ Rep. Kenny Marchant

~~ Rcp. Thaddeus G. McCotter

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(Rep. Mick Mulvaney

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6;(LO~ ..~ Rep. William L. Owens

Rep. Frank Pallone, Jr.

Rep. Ron Paul

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Rep. Collin C. Peterson

ChO-dL Rep. Chellie Pingree

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~~~. Rep. Alan Nunnelee

cp. Bill ascrcll, Jr. ~A(~ a

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Rep. ames B. Renacci

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Rep. Mike Rage

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9C(J_Rep. Dennis A. Ross

c4dl~~Rep. Lucil e bal-Allard

Rep. Ileana Ros-Lehtinen

Rep. Sleven R. Rothman

Rep. Edward R. oyce

~ ~,..S-/\>/ Rep. Pete Sessions 7

Rep.

Rep. Palriek J. Tiberi

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~((~.,. Rep. Michael R. Turner Rep. Fred Upton

JJ a.W~L~,,.._-/!!!'mnry A. W,2:m

Rep. Allen B. West

A v4ll.1 Rep. Ed Whitfield r­

ylUl C. Woolsey

Rep. Sam Graves Rep. Breit Guthrie

10

Rep. Brian P. Bilbray

Rep. Gus M. Bilirnkis Rep. im Cosla

Rep. Michael M. Honda ep. ennis A. Cardoza

Rep. (Aarlha Roby

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