Civil Rights Groups, Mortgage Lenders Unite Against 20% Rule on Home Loans

Thursday, 02 Jun 2011 04:03 PM

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Bankers and advocates for minority rights have teamed up to prevent the federal government from tightening requirements on home loans, The New York Times reports. Groups including the N.A.A.C.P. are joining with mortgage lenders to warn that the new restrictions will discourage home ownership by lower-income families.

NAACP, mortgage, 20&, home loans, AP photoThe new alliance marks a turnaround in the saga of the housing collapse. High rates of foreclosure in minority communties led to charges that home lenders had preyed on consumers. Now the former adversaries are both condeming a rule change that would effectively require a homebuyer to make a 20 percent down payment on a house.

“Most people don’t have 20 percent to put down,” said Janis Bowdler of the National Council of La Raza, the Hispanic advocacy group. “These rules will so significantly deter the ability of first-time buyers to break into the market that we will see a real decline in home ownership.”

The alliance is also keeping tabs on Fannie Mae and Freddie Mac, and may oppose attempts by Congress to restructure the two big government-backed mortgage holders if those reforms make credit harder to come by for newcomers to the housing market.

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