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Twenty Percent Down Payments Required?

  • July 1, 2011

by Jacqueline Zenn

Recently, Chicago magazine reported that members of Congress, real estate agents and professionals, and even some civil-rights groups are against a plan from federal regulators that would require a twenty percent down payment from many potential homeowners.

20 percent down payment

August 1st marks the deadline for comments on a proposal that would required prospective buyers to have a significant (1/5) equity stake in the purchase; the idea is that this investment will make homeowners less likely to simply walk away from their homes. The “qualified residential mortgage” or QRM rule is under consideration as part of the Dodd-Frank Act, a collection of financial reforms, and this particular one aims to shift the risk of a mortgage from the banks to the homeowner.

According to Chicago magazine, opponents of the proposal claim that it would bar many individuals from homeownership. Mabel Guzman, president of the Chicago Association of Realtors (CAR), told the magazine “that one study showed that, for a median-income family hoping to buy a median-income house, it could take 14 years to save up a down payment. “And that’s without saving anything for college, for retirement, or for anything else,” she said. She also claimed that this proposal is a overreaction the easy lending climate of five or so years ago. “When we need jobs and economic recovery, this is like a de-stimulus,” she said. “Housing is a big piece of the (U.S.) economy. If you make it more difficult to have access to housing, you’re not helping the economy recover.”

This article originally published at http://chicago.urbanturf.com/articles/article/twenty_percent_down_payments_required/3753

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