Borrow from the Fed to "obtain the extra down payment"?????? Lemme get this straight....the housing price bubble burst because mortgagees unqualified financially to maintain montly mortgage loan patments in any other environment than one of rapid home valuation appreciation that permitted cash out refis in as little time as less than six months after the clsoing of the home purchase, did indeed fail in great numbers to make timely monthly payments as soon as valuation appreciation stopped.

These borrowers were put into the mortgages they obtained by creative methods including down payment assistance "programs" masking seller kickbacks on proceeds of artifically high selling prices and via "No Doc" and "low doc" "liar loans". Coupled with seond home buyers, "flippers", and other speculators, demand drove home prices even higher, further encouraging unqualified first time buyers to obtain mortgages only workable in an ever increasing home valuation scenario, with ever more first time buyers throwing even more mortgage loan proceeds on the fire or rapid home valuation increase.....prices chasing their own tales until the music stopped.

Why would any responsible lender, private of government, want to lend "down payment" funds to anyone in this market? The price of the average home must fall, if price levels are ever to stabalize....to a level in a low interest rate environment, of no more than 3 times average household income in a given market. In Californai and in most other post bubble regions of the US, prices have not declined to that balanced level.

Why is there any objection to permitting prices to fall to sustainable levels, with minimum loan requirements that include a stable employment record, with the mortgage applicant required to have a good credit score, 20 percent of the purchase price and closing costs sourced from seasoned verifiable accounts, and by submission of several years of current income tax returns to the lender?

Wouldn't lending standards like those help to quickly reduce prices to sustainable levels and more quickly resolve the lock up stalling liquidity in housing assets? Homes are now an illiquid asset, costly to hold in an environment of price decline slowed to a crawl that creates a log jam of unsold inventory. Why permit the farce of sellers in denial to continue for many years, as the Japanese have for so long? Why not cut the crap and stop putting buyers into home purchases that are still too highly priced to possibly justify easy lenfing terms or any sort of down payment assistance or down payments below 20 percent, when the majority of those buying today in states like California will surely be living in homes that will be worth less in the next few years?

Why set up current and near future buyers for failure and hardship when we know what is needed to put the housing market back in a stable mode? The dynamic has changed....it's been more than two years since homes were a liquid investment to be bought with easy credit with the option of a quick sale at the whim of the owner at a tidy profit? Recent experience is that housing is an illiquid investment with loans obtained by the well capitalized who still must jump through hoops to qualify for a mortgage, and who understand that they may be stuck with their purchase for a long time and must pay high carrying costs to hold and maintain their property, with no certainty that they will profit when they do sell. For many, renting may be a smarter choice than buying until prices become attractive in the three times household income valuation model.