20 Percent Mortgage Down Payments Unlikely

Remember the proposed requirement from six federal agencies that home buyers make down payments of at least 20 percent if they want the lowest interest rates?

We've been keeping you up to date on this issue here, and the latest is, the 20-percent proposal is still alive, but it's temporarily bogged down in agency reviews of the roughly 12,000 comments filed by interest groups and individuals.

It almost certainly would not be ready for adoption until the first quarter of 2012. Even then, there would be a mandatory one-year lag before the requirement could take effect, pushing the issue into 2013 — well after the presidential and congressional elections.

The controversy comes at a politically sensitive time for President Obama. Housing continues to be a lead weight holding back the economic recovery. His polling numbers are plunging, plus key segments of his political base — unions, community and economic development groups, and consumer activists — oppose any move to force working families to come up with more cash to buy a home. The six agencies' rule — even in proposal form — is likely to be an attractive target for the president's opponents next year.

Bottom line: Don't expect to see a 20-percent rule in the near future. Even independent regulators don't operate in political vacuums. They've either gotten the message already or they will soon.