Democrats Reject 5% Down Payment Rule For Mortgages
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The Senate today rejected a proposal by Sen. Bob Corker, R-Tenn., to impose a minimum 5% down payment for virtually all home mortgages. The amendment to the broader financial regulatory overhaul bill, which failed 42-57, would have required income verification and an assessment of borrowers’ ability to repay as well.
Corker’s proposal also would have stripped out a provision that required financial firms securitizing loans to keep a 5% portfolio risk.
Democrats then passed their own amendment imposing some underwriting standards, but no minimum down payment.
Regarding Corker’s bill, Democrats argued that a 5% down payment would hurt minorities and the poor.
But if you can’t scrape together a 5% payment, maybe you should remain a renter.
It wasn’t that long ago that a 20% down payment was standard and 10% was deemed risky. A sizeable down payment gives homeowners a strong incentive to make their payments and gives them a cushion against home prices fluctuations. Now 5% is too restrictive?
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May 13, 2010 at 12:52 PM