Bryan Flynn's Central Massachusetts Mortgage Blog


Fannie Mae withdraws declining market policy.

Fannie Mae just announced a withdrawal of their declining market policy "Lenders are no longer required to make a downward adjustment to the LTV, CLTV, or home equity CLTV (HCLTV) based on the location of the property." Here is the breakdown:

  1. Fannie Mae withdraws their declining market policy effective 6-1-08;
  2. Declining market policy is replaced by a "National Down Payment' policy which reduces maximum allowable LTVs for 1-unit primary residences;
  3. 95% is the maximum LTV, CLTV, HCLTV for manually underwritten loans;
  4. 97% is the maximum LTV, CLTV, HCLTV for DU underwritten loans, including MyCommunityMortgages® and Flex mortgages;
  5. CLTV of 105% with Community Seconds® is still allowed;
  6. Effective date is for applications taken on or after June 1, 2008.

So still no 100% products out there from Fannie.  Freddie Mac followed suit with the same withdrawal.  A sign of the turn in lending tightening???  Probably not I am reading what MI companies are going to say about all of this.

Comment balloon 6 commentsBryan Flynn • May 19 2008 09:14PM


Bryan, thank you for the information, it is a great post!

Posted by Jean Powers, CRS,e-PRO,HAFA,SFR Broker, Northern California (Kane & Associates call 510.908.9002) about 12 years ago

Wow, thanks for the great news.  I am in the process of buying some investment properties and this will really help out.

Posted by Lisa Friedman, Central New Jersey Real Estate (Alliance Realtors) about 12 years ago

Overall, this sounds like good news.  So people have to come up with 4% or 5% - that's better than not being able to get a loan at all because you are in a delcining market. 

Posted by Bo Buchanan, Directory, For Real Estate Pronulls ( about 12 years ago
Okay...YAy....they really messed up a couple of my deals with that a few months back..
Posted by Konnie Mac McCarthy, Broker/Owner - VA & MD "Time To Get A Move On!" (MacNificent Properties, LLC) about 12 years ago

I don't think MI comapnies will follow suit, they are suffering from tremendous losses due to the record rate of foreclosures.  If MI companies impose restrictions on declining markets than this move by Fannie Mae will be meaningless because you still won't be able to get the loans.

John Thomas - Certified Mortgage Planner

Posted by John Thomas, First Time Home Buyer Expert (Primary Residential Mortgage Inc.) about 12 years ago

I hear ya John those same thoughts crossed my mind as well.

Posted by Bryan Flynn, Central Mass and Worcester Mortgages (Regency Mortgage Corporation) about 12 years ago