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Proposed minimum downpayment rule debated

Posted by: VHFA on 6/9/2011

Proposed mortgage lending rules being considered by federal regulators are drawing fire from a variety of players in the housing industry.

At the heart of the debate is a rule that would require borrowers submit a 20 percent downpayment to purchase a home. Intended to help prevent the type of defaults that contributed to the mortgage crisis a few years ago, critics say the rules would stifle the economic recovery and shutout many credit-worthy buyers or, at least, increase their costs through higher interest rates when they can't meet the proposed requirement.

Some of the bigger players speaking out against the rules are the Mortgage Bankers Association, the Center for Responsible Lending, and the National Community Reinvestment Coalition.

The 376-page "Qualified Residential Mortgages" rules are being considered by the Federal Reserve, Department of Housing & Urban Development, FDIC, Federal Housing Finance Authority, Office of the Controller of the Currency, and Securities and Exchange Commission.

The agencies issued a joint statement earlier this week extending the comment period from tomorrow until Aug. 1.

Read more about the debate at MSNBC.