Downpayments decline (in some areas)

This WSJ story($) provides another indication of how, in some parts of the country, the housing market is returning to normal. But, it will likely take some time before the former housing bubble states of California, Nevada, Florida, and Arizona are viewed this way.

Down-Payment Standards Eased
Some mortgage insurers and lenders are beginning to relax their down-payment requirements, in a sign of increased confidence in the housing market.

The changes, which are being done on a market-by-market basis, mean buyers in some parts of the country can now borrow 95% instead of 90% of a property's value. Until recently, mortgage companies had tighter standards for these markets because of falling home prices.

"We are feeling better about the economic condition of the marketplace," said Michael Zimmerman, senior vice president of investor relations at mortgage insurer MGIC Insurance Corp. Borrowers who want to finance more than 80% of a home's value must typically purchase mortgage insurance.

Earlier this month, MGIC removed New Orleans, Dover, Del., Akron, Ohio, and four other areas in Ohio from its list of restricted markets. The moves followed the company's decision in September to loosen restrictions on 11 markets, including Denver and St. Louis.

It still seems like it would be much, much simpler to just require 20 percent down across-the-board - no ifs, ands, or buts. This whole idea of "assessing risk" and charging borrowers accordingly seems prone to produce more housing bubbles in the future in ways that will be completely different than the way the last housing bubble was created.

Maybe that's the whole idea.