Builders Feel Pinch of Key Omission From the Housing Bill

Wall Street Journal (07/30/08) P. C10; Corkery, Michael
Home builders are concerned about a couple provisions in the housing bill before President Bush. A provision that would boost the FHA's minimum down payment to 3.5 percent from 3 percent could hit buyers hard, along with a provision that would ban seller-funded down-payment assistance. These down payment "gifts," fronted by a nonprofit organization that is later refunded by the builder, accounted for 33 percent of mortgages written by Lennar Corp. in the second quarter, for instance. The housing research firm Zelman & Associates estimates that 10 percent of home buyers nationwide could be pushed out of the market as a result of the down-payment gift ban, with more affordable markets such as Texas that rely heavily on such down payments possibly seeing the home buyer pool shrink by upwards of 25 percent.