Fannie to Scrap Policy Over Down Payments
Fannie Mae is expected to announce that it is scrapping a policy requiring higher down payments on home mortgages in areas where house prices are falling.
Starting on June 1, the new requirements of 3 percent or 5 percent, which replace rules set in December, will apply nationally to loans on single-family primary residences.
Fannie Mae “will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions,” Marianne Sullivan, senior vice president for single-family credit policy and risk management, said in a news release.
Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages through its automated underwriting system, and ratios of up to 95 percent for other loans.
A conforming mortgage meets the requirements for loans that Fannie Mae and Freddie Mac can purchase.
The size of these loans was temporarily increased in March by their regulator to as high as $729,000 in high-cost areas from $417,000 to try to stimulate lending in one of the worst housing markets since the Great Depression.
Fannie Mae also said it would continue to allow loans with Community Seconds, an assistance program, for up to 105 percent combined loan-to-value ratio.
With Community Seconds, a borrower has a second-lien mortgage to help cover a down payment and closing costs, with funding usually provided by a state or local housing agency, employer or a nonprofit organization.
Just wondering what some of you AR folks think about this "innovative" solution from Frannie Mae?
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Paige- It is about time! They need to get a life, and this is one of the ways in which we can get the markets moving again. We have lost a lot of deals here in Florida because of the declining market rules.