Fannie Mae scraps higher downpayment requirements
Friday May 16, 9:54 AM EDT
WASHINGTON (AP) — Fannie Mae says it is doing away with higher minimum downpayment requirements for borrowers in distressed real estate markets.
The government-sponsored mortgage financier said Friday it will require minimum downpayments of between 3 percent and 5 percent for all loans that it guarantees.
That replaces a December policy that required a higher minimum if the loan was for a home in a market with declining real estate prices.
Washington-based Fannie says the move is part of its effort to help resuscitate the flagging mortgage market. Thanks, Dana Dukelow, for the article.
Other lenders are doing the same; however, it appears that the market for second mortgages is shrinking. For the average buyer, this is a mixed blessing: once again, you can get a home with only 5% or 10% down. That's the good news. The bad news is that rather than have two loans (say, one for 80% and one for 10%), a buyer will now have just one loan, but will pay "private mortgage insurance" every month.
In short sale news, it appears that the lenders are finally streamlining the process and it isn't taking so long to get an approval on a purchase contract. Also, in short sale cases where there is both a first and second loan, the holders of the 2nd loan are pretty much giving up and going away for a pittance (about $1000). No wonder the lenders of 2nd loans are dwindling!