Congress Considers Mandate on 5% Minimum Down Payments

Some Republican lawmakers are calling for the Senate’s financial-overhaul bill to include specific mortgage standards that originators would be required to meet when underwriting home loans.

In exchange, they want to dump from the current legislation the “skin in the game” rules that would require banks that package loans into securities to hold a portion on their balance sheet.

Under the amendment, proposed by Sen. Bob Corker (R., Tenn.), Congress would set minimum down payments of 5%. Mortgage originators and investors who buy loans in the secondary market would also have to adhere to other standards including, documentation of a borrower’s income and assets and certain metrics to determine that borrowers were able to repay their loans.

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