Big Boost to Washington DC Area Real Estate

Wall Street Journal (05/16/08) P. A3; Hagerty, James R.
On June 1, Fannie Mae will end a policy that mandates higher down payments in "declining markets," or those where property values are falling. The policy was opposed by the National Association of Realtors and the National Association of Home Builders, as well as affordable housing advocates, because it hurt affordability at a time when housing markets already are distressed and priced many prospective buyers out of the market. The government-sponsored enterprise recently approved a new policy that will adopt across-the-board maximum loan percentages for owner-occupied, single-family properties. While Fannie Mae continues to offer some zero-down programs, the maximum mortgage amount is 97 percent for those approved by its automated underwriting program and 95 percent for other borrowers. Freddie Mac also has a declining markets policy, but it offers some flexibility in that neighborhoods with stable or rising home prices--despite depreciation in the entire metropolitan area--are not considered declining markets.