Thursday, January 13, 2011

Banking Law Hung Up On Down Payments

Banks should require higher down payments.  Part of the problem with the bubble, is that buyers could walk in with little or nothing down.
Wells Fargo & Co., the nation's largest mortgage lender, has asked U.S. regulators to set a down-payment standard of 30% on mortgages that wouldn't have to meet a new requirement that banks retain 5% of a loan if it is securitized. The so-called risk-retention requirement is aimed at preventing future housing meltdowns because lenders could face steeper losses if their loans go bad.
During the real-estate boom, it was common for home buyers to put down little or nothing. Many lenders now require buyers to put down about 20% for home loans that don't require mortgage insurance.
 If you have 30% down payments, then you'll see a lot of pressure on home prices.

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