20% down prices out buyers, Kerry says

[Mass]

http://www.boston.com/business/articles/2011/06/02/20_down_prices_out_buyers_kerry_says/

US Senator John F. Kerry yesterday urged financial and housing leaders to reconsider a proposal that would require some home buyers to make down payments of at least 20 percent to obtain low-interest mortgages.


The Massachusetts Democrat said the plan, offered by federal regulators earlier this spring, would prevent many credit-worthy borrowers from buying homes, further depressing the housing market.

“None of us — and none of you — want to see reform create an onerous unintended consequence: keeping middle-class families trapped in a cycle of paying rent when, in fact, they could well be paying mortgages,’’ Kerry wrote to Shaun Donovan, secretary of the US Department of Housing and Urban Development; Federal Reserve chairman Ben S. Bernanke; and Sheila C. Bair, head of the Federal Deposit Insurance Corp.
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Kerry said that in a state where property prices are above the national average — including Massachusetts — it is unreasonable to expect that buyers can afford to put 20 percent toward the purchase price of a home. He said that based on the median sales price for a single-family home in Massachusetts of $274,00, a buyer would need at least $55,000 in cash.
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Kerry joins other critics of the proposal, including a rare alliance of mortgage lenders and consumer advocates who this week launched a campaign to educate people about the issue. The group includes national groups such as the Center for Responsible Lending, Consumer Federation of America, National Community Reinvestment Coalition, and National Housing Conference.