Senator Blumenthal Urges Regulators to Adopt Rules That Make Credit Available to Potential Homeowners

Statement

Senator Richard Blumenthal last week joined a bipartisan group of 39 senators to urge federal regulators to adopt policies that keep credit available to middle-class families that are looking to purchase a home. The proposed rule in question would require a 20 percent down payment for a mortgage to be considered a historically safe "qualified residential mortgage."

In the letter, Blumenthal and his colleagues maintained that while it is important to pursue regulations to protect the housing market from another subprime mortgage crisis, overly restrictive rules would discriminate against first-time home buyers and jeopardize many families' chances of receiving the credit they need to purchase a home.

"The proposed regulation goes beyond the intent and language of the statute by imposing unnecessarily tight down payment restrictions… Well underwritten loans, regardless of down payment, were not the cause of the mortgage crisis," wrote the senators in a letter 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; Mary Schapiro, chairman of the Securities and Exchange Commission; John G. Walsh, the acting comptroller; and Edward Demarco, the acting director of the Federal Housing Finance Agency.

According to the Warren Group, the median price for single-family homes sold in Connecticut for 2010 was $250,000 meaning that homebuyers would be required to put down at least $50,000 in cash to be exempt from this rule. The National Association of Realtors reported that in sales of homes to first-time buyers last year, 96 percent of sales included down payments that were less than 20 percent.

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