The results of the pending presidential vote will likely have a major impact on how much the federal government is willing to assist homeowners going forward. John McCain wants the government to assist homeowners and potential buyers less than the Bush administration, and far less than the democrats want. Here is an excerpt from a recent article at SFGate.com:
Partisan politics aside, presumptive Republican nominee John McCain proposed something March 25 that no other major presidential candidate has advocated in decades: Raising minimum down-payment levels for home mortgages.
No more zero-down deals. No more “piggyback” plans that combine 90 percent first loans with 10 percent seconds. No more “down payment assistance” schemes where sellers indirectly supply all or most of the cash needed for the buyer’s down payment.
Even the 3 percent minimum required by the Federal Housing Administration would be raised under McCain’s plan. That puts him squarely at odds with the Bush administration and Democratic leaders in the House and Senate, who are negotiating reform legislation that would cut FHA’s minimum to zero – favored by the House – or 1.5 percent, favored by the Senate.
Proponents of low FHA down payments say that they are necessary to allow moderate-income families to purchase first homes and that if properly underwritten and serviced, they do not lead to extraordinarily high default or foreclosure rates.
McCain also said the giants of the mortgage industry – congressionally chartered Fannie Mae and Freddie Mac – “should never insure loans when the homeowner clearly does not have skin in the game.” He did not specify how much skin would be needed.
McCain’s rationale on tightening up down payments: He thinks a key contributing factor to the current national mortgage crisis was the tiny – or nonexistent – equity contributions required by lenders during the boom years. When the boom fizzled and home values fell, many borrowers found themselves in negative equity positions, owing more on their mortgages than the market value of their homes.