Republican U.S. Sen. Bob Corker of Chattanooga has made a proposal that deserves support among members of Congress. He said that home buyers ought to put something down to get a mortgage on a home.
Sen. Corker is troubled that financial reform legislation in the Senate does not address the serious problem that many people got home mortgages in recent years without putting down any money. That and other factors led to a meltdown in which many Americans lost their homes, and many more will face foreclosure as they become unable to make their payments.
“This bill does not deal with the one core issue (of) this calamity, and that is that we had a whole lot of people in this country who borrowed money who shouldn’t have,” Sen. Corker told the Better Business Bureau of Southeast Tennessee and Northwest Georgia. “We had loan underwriting standards that made a lot of home buyers almost renters because there was no money down.”
His concern is justified. A person who first saves up to get a loan is more likely to feel he has a “stake” in his home ownership. He will be more apt to take care of the home if he has paid at least some percentage of the principal up front, rather than borrowing 100 percent. In turn, the desire to maintain his property value gives him a reason to be beneficially involved in his community by promoting good schools, voting for sound elected officials and so forth.
The “easy” alternative of “nothing down” is a poor alternative indeed.