Fannie Mae announced this week that it will lower the amount of down payment it will require for single-family conforming home loans. Starting June 1st buyers will only be required to put a 3% down payment however the home they are purchasing will need to be their primary residence.

"We've been working on ways to meet the market's need to recover," said Marianne Sullivan, Fannie Mae's senior vice president in charge of single-family credit policy and risk management. "This new down-payment policy reinforces our goal to support successful homeowning, not just homebuying, as we seek to bring liquidity to all communities and help the housing market recover."

This changes an 11-year old law that required higher down payments in markets where home prices are falling. A recent report released by Standard & Poors/Case Shiller showed that of the 20 major metropolitan markets they survey reported falling home prices. Critics of the change, the National Association of Realtors and the National Association of Home Builders have complained that it will deepen the already crippling housing market.

Fannie Mae stock has seen a 24% decline in price since the beginning of this year as a result of a $2.2 billion loss reported for the first quarter. They however recently announced they will be raising $6 billion in new capital. The U.S. Senate Banking Committee agreed yesterday to new legislation that would reform and overhaul both Fannie Mae and Freddie Mac.