Tuesday, July 5, 2011

HUD Secretary on 20% down payment requirement: “We can’t overcorrect”

Secretary Donovan appeared on CNN’s “State of the Union” on Sunday to discuss the 20% down payment requirement in the draft qualified residential mortgage (QRM) rule as part of the Dodd-Frank legislation.  Mortgage loans that don’t meet the down payment requirement would be subject to risk-retention, potentially raising costs and unduly burdening low- and moderate-income homebuyers with good credit but little upfront capital.

Donovan asserts “we can’t overcorrect” the problems that led to housing meltdown and must find ways to provide access to credit that isn’t overly restrictive for Americans who may be successful homeowners. By going so far in the “other direction, we cut off ownership for people,” said Donovan to a CNN correspondent.

In addition to QRM, Donovan gave his analysis that home prices will “very unlikely” see decline in the coming years. The bigger question is when housing prices will rise—some analysts say as early as this fall while others think it to be next year. Donovan advised this to be the right time to buy a home due to low housing prices that will likely rise.

Watch video of Secretary Donovan on CNN’s “State of the Union” here. Also read more on NHC’s position on QRM here

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