Fannie Mae has been in the news a lot over the past several years. We’ve seen them in the middle of the mortgage meltdown several years ago. We’ve seen articles discussing whether they should be more involved or less involved in the mortgage markets. We’ve seen the market full of Denver Fannie Mae homes using the HomePath program. We’ve seen just about everything.
This weekend, The Wall Street Journal revealed that Fannie Mae is in discussions to significantly reduce it’s purchases of low down payment mortgages (mortgages with a minimum down payments of 3%):
“Fannie never stopped accepting purchases of loans with 3% down payments, even after lending standards were ratcheted up following the housing bust. But many lenders stopped offering them, in part because they weren’t able to obtain mortgage insurance for those loans, which Fannie requires.
In recent months, however, a series of changes in the mortgage market have led to an uptick in low-down-payment loans available for sale to Fannie. That prompted a review of the company’s lending policies, and officials are said to be working on a plan to limit the company’s purchases of these loans. The changes aren’t being made because of immediate problems with loan performance, according to people familiar with the discussions.”
Currently, FHA mortgages require a 3.5% down payment to buy a home, but the mortgage insurance rates for a low down payment FHA mortgage typically make the overall monthly payment higher than a Fannie Mae backed mortgage with a higher interest rate. These FHA mortgages are easier to qualify for, but the buyers end up paying for it over the 30 year life of the mortgage.
With the recent low down payment and zero down mortgage programs being offered in Colorado, the impact of Fannie Mae scaling down it’s low down mortages may not bpaying for it over the 30 year life of the mortgage.
With the recent low down payment and zero down mortgage programs being offered in e immediately felt. It may take months after anything is down to see the real impact such a move would make on the first-time home buyer market.
We will keep you posted here with information as we receive it.