Clearly you don't understand mortgages, if the borrower had 50% down and prices decrease by 35%-40% and the borrower defaults, the borrower would be underwater once you take foreclosure costs into consideration.  The risk to financial institutions is that a house is an illiquid asset and requires time to foreclose.  The policy, on the other hand, is designed to keep borrowers in check so they're not over-leveraged.  Be careful about what you're currently getting?