No-money-down mortgages, largely believed to be at the heart of today’s home-financing woes, are getting a new life, according to a Wall Street Journal story this week that focuses largely on the participation of new home builders in such programs.

Bellevue-based Quadrant Homes, which has several Pierce County projects, was mentioned for its $500 promotion: the company’s site says $500 gets you into a home, if only you can give up your latte habit.

Peter Orser, Quadrant president, was unavailable to comment today and his media representative said no one else from the company could comment. (Orser also was not quoted in the WSJ piece.)

So what are your thoughts on 100 percent mortgage financing? Are no-money-down mortgages an OK way to go? Can the housing market sustain itself without bringing in buyers who have little or no money to put down? Is it even realistic, given today’s housing prices, for first-time buyers to have a 10 percent or 20 percent down payment? (Pierce County’s median home price in May, according to the Northwest Multiple Listing Service, was $259,739.)

Here’s more from the Wall Street Journal story.

The offers — including "100 percent financing" — are made possible due to down-payment assistance programs run by nonprofit organizations. These programs are funded largely by home builders and also by private homeowners desperate to sell. The seller-funded groups provide enough down-payment money to buyers that they can qualify for a mortgage backed by the Federal Housing Administration, which requires at least a 3 percent down payment.

Supporters of the down-payment programs say they help the FHA fulfill its goal of assisting first-time home buyers. But critics say the programs will burden the government agency, and taxpayers, with bad loans. The FHA, which essentially is filling the void left by the collapse of the subprime market, renewed a push to eliminate the programs this month, after warning that above-average default rates for seller-assisted down-payment programs will force the agency to request a government subsidy for the first time in its 74-year history. The agency says it will need $1.4 billion next year.

The FHA estimates that down payments provided by nonprofit groups account for 34 percent of all 200,000 loans backed by the FHA so far this year, up from 18 percent in all of 2003 and less than 2 percent in 2000. And the agency says that borrowers are two to three times as likely to default on their payments when they receive a down payment from a nonprofit.