Daily Economic Update: QRM Regulation, Germany and Greece

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights QRM regulation and Germany's reaction to the debt situation in Greece.

• Good news - for a few additional months, at least.  A new regulation, part of last year’s Dodd-Frank bill, to possibly mandate a minimum 20 percent down payment to obtain a mortgage is getting postponed a bit.
• Before any new rules are imposed, there is a comment period which permits people to submit how and why the rules will harm or help the country.  NAR has provided comments of a significant negative impact to the housing market and homeowners.  See the video here.
• Because of strong communication efforts related to this matter by many groups, the comment period was extended yesterday.  This extension is now until August 1, and nonetheless is quite a rare happenstance in Washington policymaking.  It could also be an admission by regulators that the original rule of requiring a 20 percent down payment may have serious unintended consequences.  However, after the August comment period, the regulators will come up with precise rules on down payment requirements that will go into effect in one year.
• Separately, the German Chancellor Angela Merkel is in Washington today.  A few years ago, she refused to give in to a broad international pressure to implement economic stimulus measures for the German economy which at the time was facing a recession.  Today, she can smile knowing that the German recession was short and shallow, and that the German economy is performing better now than before the recession with a lower unemployment rate to boot.
• Angela Merkel, however, is unpopular in Germany and may lose out in the next election.  German citizens are angry that she wants to give aid to Greece.  A large chunk of Greek debt is held by German banks.  Furthermore, the future standing of the Euro currency would be on the line if Greece was to default and duck out of the Euro.  German citizens do not seem to care about that and are focused instead on a simple question of fairness: why they should be expected to help Greece when its citizens are retiring at a much early age than the typical German.