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In the article below published by Reuters, Lawmakers agree that 20% down payment requirements are onerous and will further damage the housing industry and homes values nationwide.  In our recent trip to Washington D.C. REALTORS (May 9-15, 2011) made our position on GSE reform and QRM's very well know.  REALTORS strongly oppose many of the provisions of Dodd-Frank and the proposed 20% down payment requirements to obtain a QRM (Qualified Residential Mortgage).

It is our contention that the size of the down payment does not indicate the quality of the loan.  It is much more important to vet the buyers credit worthiness and their ability to re-pay the loan.  Proper underwriting and scrutiny of a buyer is imperative.  Our current housing crisis was not caused by low down payments.  It was caused by unrealistically lax lending requirements including, Stated Income, Stated Wage, Stated FICO and low or no documentation loans.  These were highly speculative and DANGEROUS practices.  We are ALL still paying for these sins.

Residential housing accounts for $2.23 Trillion to the annual economy, nearly 1/6th of the nations economic activity.  The nation's finances WILL NOT get better without a healthy housing market.  Mandating higher down payments, lower loan limits and modifying or eliminating the Mortgage Interest Deduction is  NO WAY to insure a housing recovery.  We need reasonable lending practices to return and affordable loans available to consumers.  We enjoy the lowest interest rates in decades and the most affordable housing markets we have seen in years.  Washington needs to get out-of-the-way and quit trying to help.  Their continued manipulation is ill-advised and will lead to further economic declines.

Remember, my business is built on referral.  If you or someone you know needs professional Real Estate services, please consider me.  I can be reached as follows:

 Michael J. Droege  907-230-3372  mjdroege@gci.net  www.MichaelDroege.com  mjdroege@wordpress.com

 Lawmakers: 20% Down Payment Is Too High

A bipartisan group of lawmakers are urging federal regulators to overhaul a mortgage proposal that includes a call for a 20 percent down payment for the “safest mortgages,” saying that it could threaten a full economic recovery “from years to come.” In a letter obtained by the media on Wednesday, more than 160 lawmakers in the House of Representatives called the federal regulator’s mortgage proposal “overly burdensome government dictate” and said that the proposal would reduce the availability of affordable mortgages. In an effort to urge more responsible lending and borrowing, several federal agencies have been developing a proposed risk-retention regulation under the Dodd-Frank Wall Street reform law, which requires lenders that securitize mortgage loans to retain 5 percent of the credit risk unless the mortgage is considered a safe mortgage or a “qualified residential mortgage.” (FHA and VA mortgages would be exempt.) QRMs would be exempt from the 5 percent credit requirement but would have to meet certain guidelines, such as the proposed 20 percent downpayment requirement. Borrowers with less than 20 percent down could then be forced to pay higher fees and interest rates. In the letter, the lawmakers called the 20 percent downpayment guideline too high and asked federal regulators to consider lower downpayment loans that have mortgage insurance that would constitute a QRM. The National Association of REALTORS® has been an outspoken critic to the higher downpayment requirement, arguing that the 20 percent down payment would greatly jeopardize a housing recovery. “We need to strike a balance between reducing investor risk and providing affordable mortgage credit,” NAR President Ron Phipps said in a public statement last week. “Better underwriting and credit quality standards have greatly reduced risk. Adding unnecessarily high minimum down payment requirements will only exclude hundreds of thousands of buyers from home ownership, despite their creditworthiness and proven ability to afford the monthly payment, because of the dramatic increase in the wealth required to purchase a home.” Source: “House Lawmakers to Regulators: Kill Mortgage Plan,” Reuters News (June 1, 2011)