20 Percent Down Payments on the Way...If We're Lucky

20 percent down payments
20 percent down payments

Federal banking regulators are pushing for 20 percent down payments

, according the Wall Street Journal. You see, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 -- the name which draws guffaws of cynical amazement among those who know what Chris "Friend of Angelo" Dodd, pictured left, and Barney "My Boyfriend is a Fannie Mae Executive" Frank were actually up to during the Bubble Years -- contains a provision authorizing federal regulators to define a "gold standard residential mortgage." Well, the busy beavers at the FDIC, OCC, and the Fed have done just that.

What they're pushing is for private mortgage loans that "qualify" to require 20 percent down payment for the mortgage, 25 percent equity for a refinance, and 30 percent equity for a cash-out refinance (where you take on a bigger mortgage, while liquidating the first one).

Predictably, various folks are squawking in response. Inman News, a real estate industry site, is reporting that an outfit named the Center for Responsible Lending thinks it's a horrible, horrible idea to require higher down payments. According to the CRL lobbyist cited in the story, Susanna Montezemolo, there really is no problem with low-down payment loans. The problem was with bad lending practices during the bubble years, with risky loan terms and weak underwriting standards.

Who to believe? What to think?