When it comes to qualified residential mortgages (QRM), industry and consumer groups like to say they are united, arguing that too strict a QRM definition will result in disqualifying many otherwise creditworthy borrowers. But not everyone is of that mindset.

At last week's American Association of Residential Mortgage Regulators in San Francisco, the executive director of a non-profit legal service that focuses on foreclosures said she has no problems with requiring borrowers to have a 20% downpayment, especially if, as some have warned, cash-strapped home buyers are pushed into loans insured by a less-demanding Federal Housing Administration (FHA).

"It would be great if (QRM rules) would drive borrowers to the FHA," Maeve Elise Brown of Housing and Economic Rights Advocates in Oakland told the meeting. Her reasoning? The FHA "has better loss mitigation tools."

"Until we have national servicing standards, I'd be happy to see people driven toward the FHA," said Brown, who has 23 years' experience as a public interest attorney. "It's just a heck of a lot safer for people in the long run."

Robert Strupp, another consumer advocate, was of the opposite opinion, saying that 20% down is too heavy a price to pay, both for lenders who otherwise would have to hold a piece of the loan on their books as well as consumers who would have to save for years to scrape together that much money.

"Yes, consumers should have skin the game," said Strupp, who manages systemic investigations for the National Community Reinvestment Coalition. "But low downpayment loans weren't the ones that caused (the mortgage market meltdown). Most of the loans going into default were toxic."

He told the regulators that the 20% down benchmark that would separate qualified from unqualified residential mortgages would further exacerbate the divide between whites and the protected class. And it "could be worse" if the line was set at 10% instead of 20, he added, because "more whites than protected classes would qualify, home ownership would become more elitist and it would drive the protected classes into more expensive loans."

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