Fannie Mae Announces Change in Down Payment Policy for “Declining Markets”
May 17th, 2008 Categories: Mortgage Update, Real Estate News
Fannie Mae - the country’s largest secondary has announced that it will no longer require an extra 5% down payment for home purchases in areas deemed as “declining markets.”
Long a point of contention with agents and brokers across the country, the earlier Fannie Mae policy was seen as a deterrent to consumers who wanted – and could – purchase a home in markets hardest hit by foreclosures. As Dick Gaylord, president of the National Association of Realtors (NRA) noted, “It stigmatized communities with lower sales and prices.”
The announcement comes after months of talks between Fannie Mae officials and and the NAR. Under the new policy, which goes into effect June 1, borrowers can get loans up to 95% loan-to-value, even in markets where prices have been falling. Prior to this, borrowers could only get loans up to 90% – a way to give lenders a 5% point cushion against possible future declines.
To read the full announcement from Fannie Mae, click here.
Michael
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