Fannie Mae Changes Down Payment Requirements
Sunday, May 18, 2008
Government-sponsored enterprise (GSE) Fannie Mae said Friday that the company is changing its national down payment policy—a measure that will allow them to “accept up to 97-percent loan-to-value ratios for conventional, conforming mortgages processed through its Desktop Underwriter (DU) automated underwriting system.”
In addition, when it comes to loans written outside the Desktop Underwriter system, Fannie is now able to accept 95-percent loan-to-value ratios.
These changes reverse a policy created eleven years ago at Fannie that required higher down payments in markets with falling home prices.
“We are able to adopt this new, national down payment requirement, even in markets where home prices are declining, because our new automated underwriting risk assessment model DU Version 7.0 will limit risk layering and assess each loan more precisely,” said Marianne Sullivan, senior vice president of single-family credit policy and risk management. “At the same time, we believe that equity matters, especially in this market. Down payments are a critical success factor in homeownership – and responsible lending is good business.”
In addition, when it comes to loans written outside the Desktop Underwriter system, Fannie is now able to accept 95-percent loan-to-value ratios.
These changes reverse a policy created eleven years ago at Fannie that required higher down payments in markets with falling home prices.
“We are able to adopt this new, national down payment requirement, even in markets where home prices are declining, because our new automated underwriting risk assessment model DU Version 7.0 will limit risk layering and assess each loan more precisely,” said Marianne Sullivan, senior vice president of single-family credit policy and risk management. “At the same time, we believe that equity matters, especially in this market. Down payments are a critical success factor in homeownership – and responsible lending is good business.”
