This is a power play on the part of these lawmakers. I disagree with those who think it is not much of an increase... Let's be clear, it wasn't the homeowners who are the cause of the problem. The banker and mortgage brokers need to accept blame here. Let's see a show of hand, how many mortgage people took the time to explain to buyers, instead of self-dealing. You cannot legislate the people out of homeownership
The Republican led House Financial Services Committee has drafted legislation that would, among other things,
raise the FHA down-payment requirement to 5 percent
prohibit borrowers from financing their closing costs.
The draft legislation is called
‘‘FHA-Rural Regulatory Improvement Act of 2011''
It was discussed today in a House Subcommitte hearing entitled "Legislative Proposals to Determine the Future Role of FHA, RHS and GNMA in the Single-and Multi-Family Mortgage Markets".
The Committee debates the future of the mortgage finance system, and in particular, government guarantee programs that could expose taxpayers to significant losses."
Counterpoint from the Mortgage Banker's Association:
"Recently, policymakers have focused on required minimum down-payments as a measure of what factors are necessary to create sound lending practices. While down-payment certainly impacts default risk, other compensating factors, particularly full documentation of conservative loan products, are more influential mitigating factors."
"NAR strongly opposes increasing the down-payment for FHA. The correlation between down-payment and loan performance is significantly less important than the linkage to strong underwriting, which FHA continues to have. FHA's foreclosure rate remains less than conventional mortgages, so we don't believe changes to the down-payment would do anything but disenfranchise many creditworthy homebuyers".
A lot of people feel different about this. Some support it, some don't. Some think that the smartest move is to make FHA more restrictive (and then some) immediately.
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