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Fannie eases rule on down payments

May 17, 2008|From the Associated Press

WASHINGTON — Fannie Mae is doing away with higher minimum down payment requirements for borrowers in parts of the U.S. in which home prices are dropping.

The government-sponsored mortgage finance company said Friday that it would require minimum down payments of 3% to 5% for all loans that it guaranteed. That replaces a December policy that required a higher minimum if the loan was for a home in a ZIP Code with declining real estate prices.

Fannie Mae says the move is part of its effort to help resuscitate the flagging mortgage market. Fannie Mae and its smaller sibling, Freddie Mac, have been under intense pressure to relax lending policies that had been tightened in recent months as foreclosures and defaults skyrocketed.

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