by Ethan Handelman, National Housing Conference
NHC joined with many other housing stakeholders to call for changes that would protect the affordability and availability of housing from disruption by the proposed Basel III rule. Simply put, the rule implementing Basel III capital standards for banks affects how expensive it would be for regulated financial institutions to invest in home mortgages, multifamily housing, and other housing assets. In two separate comment letters, NHC and its partners called for specific changes:
- A joint letter from the National Association of Realtors, Mortgage Bankers Association, and National Association of Home Builders, NHC, and others calls for maintaining existing risk weights (which determine the capital charge banks must pay to hold specific assets) for home mortgages and give credit in risk weighting for mortgage insurance. Read the letter.
- A letter written by the Mortgage Finance Working Group of the Center for American Progress (on which NHC serves) which advocates several changes to support sustainable home lending at LTVs below 20%, encourage modifications of troubled loans, protect loans for multifamily affordable housing, and to protect small banks, community lenders, and Community Development Financial Institutions from disruptive changes. Read the letter.
The Basel III rule is just one of several regulatory actions that could seriously disrupt the affordability and availability of housing. When combined with the qualified mortgage rule, the qualified residential mortgage rule, and the future uncertainty around the entire housing finance system, this rule-making has far-reaching implications for housing options (or the lack thereof) for years to come.