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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Pogeu Mahone who wrote (305755)	5/25/2011 9:43:46 AM
From: Jim McMannis	Read Replies (2) \| Respond to of 306849

Les, BC, Obliv etc. are posting real estate stuff here because the other thread has gone more political.

To: Pogeu Mahone who wrote (305755)	5/25/2011 9:45:25 AM
From: Jim McMannis	Respond to of 306849

Warning, On Topic Political post. GOP proposes increase in FHA down payments washingtonpost.com A Republican-led proposal circulated Monday would boost the down payment requirement for mortgages backed by the Federal Housing Administration, a move some industry experts said would shut potential home buyers out of the market. Borrowers who take out FHA-insured mortgages are permitted to put down as little as 3.5 percent, making those loans an especially attractive choice for first-time home buyers. But as defaults rose during the housing market’s worst days, FHA’s cash reserves dwindled, creating concerns that taxpayers may have to come to the agency’s rescue. May 19 (Bloomberg) -- Jay Brinkmann, chief economist at the Mortgage Bankers Association, talks about sales of existing U.S. homes which unexpectedly declined in April. He speaks with Matt Miller on Bloomberg Television's "Street Smart." (Source: Bloomberg) The Republican proposal would require most FHA borrowers to put down at least 5 percent. Those who support the idea say that forcing borrowers to have more equity in their homes would better protect homeowners against default and thus improve the agency’s finances. The issue will be discussed Wednesday at a House Financial Services subcommittee hearing led by Rep. Judy Biggert (R-Ill.). The proposal has not been formally introduced in legislative form. And it’s unlikely to gain traction without bipartisan support, said Jaret Seiberg, an analyst at MF Global Inc. But if enacted, its immediate impact on the housing market would be negative, he said. Gathering the upfront cash is often the biggest hurdle for those buying their first homes. Demanding more money down“would make it even harder for first-time buyers to enter the housing market regardless of their incomes or earning potential,” Seiberg wrote in a note to clients Monday. Mark A. Calabria, director of Financial Regulation Studies at the Cato Institute, said larger down payments would no doubt have some drag on the housing market. “But it’s a modest drag because it’s a fairly small change,” said Calabria, who is scheduled to testify at Wednesday’s hearing. “It’s a smart and reasonable thing to do.” A similar Republican proposal stalled in the House last year after the Obama administration vehemently opposed it, warning that such an increase would undermine the already fragile housing market by shrinking the agency’s loan volume. At a hearing last year, FHA Commissioner David H. Stevens told House lawmakers that raising the minimum down payment to 5 percent would lower the agency’s loan volume by 40 percent in the next fiscal year and shut out 300,000 first-time home buyers.