Fannie Mae relaxing loan down payment requirements
NEW YORK (Reuters) – Fannie Mae, the nation’s largest source of home financing, said on Friday it is lowering the amount of down payments required on mortgages it purchases, even in areas where home prices are falling.
Starting on June 1, the new requirements of 3 percent or 5 percent, which replace rules set in December, will apply nationally to loans on single-family primary residences, it said.
But wait, it gets better….
Fannie Mae also said it will continue to allow loans with Community Seconds, one of various assistance programs, for up to 105 percent combined loan-to-value ratio.
With Community Seconds, a borrower has a second-lien mortgage to help cover down payment and closing costs, with funding usually provided by a state or local housing agency, employer or a nonprofit organization.
“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.
Are you flippin’ kidding me? The only piece they’re missing is giving loans to folks who can’t afford to pay them! Oh wait…
On May 6, when Fannie Mae reported first-quarter results, it announced other initiatives, including a plan to provide up to $10 billion to help Housing Finance Authorities (HFA) serve first-time homebuyers “of modest means.” In some cases, Fannie Mae said, it will buy HFA mortgages that have greater than 97 percent loan-to-value ratios.
“The definition of insanity is doing the same thing over and over again and expecting a different result.”
It’s time to start buying gold and burying it in the back yard.
