SHOULD FHA INCREASE THE DOWN PAYMENT REQUIREMENT?

The following comments are from an article in today's issue of The Wall Street Journal

Rep. Scott Garrett (R., N.J.) introduced a bill last month that would raise minimum down payments to 5%, something that the agency opposes. "Others are beginning to see that this could be the next major bailout," he said.

David Stevens, the commissioner of the FHA, warned on Thursday that the "biggest mistake" that the agency could make would be to "overcorrect."

http://online.wsj.com/article/SB125805015607445691.html?mod=WSJ_hps_LEFTWhatsNews

 [FHA Chart]

Write to Nick Timiraos at nick.timiraos@wsj.com at The Wall Street Journal

 

We represent home buyers and sellers as their exclusive agents in the Maryland suburbs of Washington DC. 

Roy Kelley
Roy Kelley & Associates
Associate Broker, RE/MAX Realty Group 

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Recipient of the RE/MAX International Lifetime Achievement Award - 2008

 
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6 Comments on SHOULD FHA INCREASE THE DOWN PAYMENT REQUIREMENT?

NOV
13
2009
474,879 Points 15 Featured Posts Outside Blog Called Shot Master

How many of the defaults are actually from 3.5% or 3% down payment mortgages - will a 5% down really improve anything?
6:37am • #1
Localism Sponsor Outside Blog

Thanks for the post Roy. I personally don't think that increasing the down payment is the answer, that just makes entry level loans harder to get for the people they were supposed to be helping. Just pay attention to who gets the FHA insured loans and what properties are bought. Tighten up those parameters and deserving qualified applicatnts will get good loans for good houses. A much better way of writing good loans rather than putting up a $ barrier to qualification to FHA loans.
6:44am • #2

5% will not do it.  We need to get rid of the $8K credit, let the free market work, and move these down payments up slowly to minimum of 10%, preferably 20%.  It will hurt for a time, but we must eventually pay the consequences. 
6:50am • #3
216,371 Points

#3 is a good post. Government has already overcorrected and we will see some consequences in our industry very soon.
6:57am • #4
952,284 Points 93 Featured Posts Outside Blog Called Shot Master

I think the problem we are in is that there is not enough of the individuals money in thegame.  It will raise to 5%, and there is room for more money as a down payment. Reality bites!
9:55am • #5
1,442,095 Points 26 Featured Posts Outside Blog Called Shot Master

Thanks so much for your comments. Personally, I would prefer to see stronger credit requirements to improve the quality of the borrowers.
10:03am • #6

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Roy Kelley advises home buyers, sellers and REO asset managers, in the Maryland suburbs of Washington DC and nearby counties. REO and foreclosures sales. Market area includes Montgomery County, Frederick County, Washington County and Prince George's County. Real Estate blogs


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