The House Financial Services Subcommittee is proposing legislation that will increase down payment requirements on FHA loans to 5% and decrease FHA loan limits. This legislation would negatively impact the housing market. Our voice is vital and we have to let our congressional representatives know that as industry professionals who work with buyers on a daily basis, we are keenly aware that increasing down payment requirements is bad for the market as a whole. If you agree and would like to write your representatives, below is a copy of the email I sent to my congressional representative. Here is the link directly to the United States House of Representatives web page: https://writerep.house.gov/writerep/welcome.shtml.
I paraphrased the MBA (Mortgage Bankers Association) and the NAR (National Association of Realtors) positions on this issue. To read their statements click on these links:
Here is my email:
"As a mortgage professional helping families with the goal of home ownership in your district I am deeply concerned with the recent proposal from the House Financial Services Subcommittee. Proposals to further increase FHA down payment requirements will cause more harm than good in the housing market place.
I concur with the leaders of the MBA and NAR who recently addressed congress opposing this legislation. As they stated and paraphrased here, t
he current 3.5 percent down payment and closing costs represent a significant financial commitment for potential homeowners. Requiring a larger down payment does little to reduce risk of default compared to strong underwriting requirements and only puts home ownership out of reach for many families who have the income necessary to carry the cost of the home purchase. Policymakers need to carefully weigh their desire to decrease risk by raising minimum down payments versus the certain and dramatic negative impact such a change would have on the availability of loans to low-to-moderate, first-time, and minority home buyers. The Mortgage Bankers Association's most recent National Delinquency Survey, released last week for the first quarter of 2011, shows that the FHA delinquency rate is down a full percentage point relative to last year, and the foreclosure start rate is down about 50 basis points. Furthermore, FHA is the only government agency that operates entirely from self-generated income, costing taxpayers nothing. In fact, FHA programs have helped bring net revenue to the U.S. Treasury, helping reduce the budget deficit. Lastly, allowing the current loan limits to decrease will have an immediate negative impact on mortgage availability. FHA has played a critical role in holding down mortgage rates. Without FHA, the higher mortgage rates paid by consumers would flow into noncompetitive banks that are too big to fail. Thank you for your time and attention to this extremely important issue."