Real Estate Central

WASHINGTON, May 16 /PRNewswire-FirstCall/ — Fannie Mae (NYSE: FNM)
today announced a new, national policy on down payment requirements for
conventional, conforming mortgages the company will purchase or guarantee.
Starting June 1, 2008, Fannie Mae will accept up to 97 percent
loan-to-value ratios for conventional, conforming mortgages processed
through its Desktop Underwriter(R) (DU(R)) automated underwriting system,
and 95 percent loan-to-value ratios for loans underwritten outside of DU,
in all geographic locations in the United States. The new national down
payment policy will supersede the policy the company adopted in December
2007 that required higher down payments in markets where home prices are
declining.

“As another part of our ‘Keys to Recovery(TM)’ initiative, we are today
announcing that we 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, Single-Family Credit
Policy and Risk Management, said. “This new down payment policy reinforces
our goal to support successful home-owning, not just home-buying, as we
seek to bring liquidity to all communities and help the housing market
recover.”

The new national down payment requirements of 3 or 5 percent will apply
to loans for purchase of single-family, primary residences. Down payment
requirements will vary for other occupancy, property and transaction types.
The company will implement systems and operational changes over the summer
to accommodate the new national policy.

“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,” Sullivan added. “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.”

Since the housing correction began, Fannie Mae has expanded its
mortgage guaranty business to serve the market’s urgent need for stability,
liquidity and affordability. The company also undertook steps to help
protect borrowers, manage the increased credit risk in the market, and
fortify the company’s capital position. Among these steps, the company has
continued to assess and establish new pricing, eligibility and underwriting
criteria for its business that more accurately reflect the current risks in
the housing market and guard against the potential for foreclosure. These
changes have been incorporated into DU and have included adjustments to
credit risk assessment, loan-to-value ratios and down payment requirements,
among other factors.

Among the changes in response to market conditions, in December 2007
Fannie Mae adopted a “Maximum Financing in Declining Markets Policy” that
restricted the loan-to-value ratios on properties in markets where home
prices are declining, essentially requiring higher down payments in these
markets. The new single national down payment policy announced today will
supersede that policy.

Fannie Mae Senior Vice President Jeff Hayward stressed the company’s
commitment to special affordable lending programs to support homeownership
for families of modest means. “We are stepping up to provide more liquidity
and affordability to some of the most distressed communities while also
seeking at least a 3 percent down payment investment through our Desktop
Underwriter system from borrowers to help ensure their success.”

Fannie Mae will continue to provide support for homebuyers that need
down payment assistance, and will continue to allow loans with Community
Seconds(R) up to a maximum 105 percent combined loan-to-value ratio.
Community Seconds allow a borrower to obtain a second-lien mortgage to help
cover down payment and closing costs, with funding typically provided by a
state or local housing agency; an employer; or a nonprofit organization.
Fannie Mae also offers MyCommunityMortgage(R) and Flex mortgage products,
which permit down payment assistance programs in the form of gifts and
grants.

“We recognize that down payment assistance programs remain a viable
tool for borrowers who can afford a mortgage long term, but might need a
little help getting started,” Sullivan said.

As part of its “Keys to Recovery” initiative, Fannie Mae is expanding
its partnership with the National Council of State Housing Agencies. The
company will provide up to $10 billion in financing to help Housing Finance
Authorities (HFA) serve first-time homebuyers of modest means. In some
cases, Fannie Mae will purchase HFA mortgages that have greater than 97
percent loan-to-value ratios.

The first “Keys to Recovery” initiative that Fannie Mae announced on
May 6, 2008 also includes: streamlined refinancing for Fannie Mae borrowers
whose mortgage balances exceed the value of their homes; improved pricing
for jumbo-conforming mortgages to help borrowers in high-cost areas; and a
neighborhood stabilization initiative with the Center for Community
Self-Help for targeted areas with high home foreclosures.

Fannie Mae is a shareholder-owned company with a public mission. We
exist to expand affordable housing and bring global capital to local
communities in order to serve the U.S. housing market. Fannie Mae has a
federal charter and operates in America’s secondary mortgage market to
ensure that mortgage bankers and other lenders have enough funds to lend to
home buyers at low rates. In 2008, we mark our 70th year of service to
America’s housing market. Our job is to help those who house America.

Key to Recovery is trade marked, and Desktop Underwriter, DU, Community
Seconds and MyCommunityMortgage are registered marks of Fannie Mae.
Unauthorized use of these marks is prohibited.



See Also

• PMI Shareholders Elect Directors; CEO L. Stephen Smith Re-elected Chairman
• Free E-book Marketing Plan Guide for Real Estate Agents Shows How to Develop an Action-Oriented Marketing Plan in Just a Few Hours
• Mortgage Success Source Proudly Announces New Partnership With Primary Residential Mortgage, Inc.

Source: Real Estate Newswire