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:
- Fannie Mae withdraws their declining market policy effective 6-1-08;
- Declining market policy is replaced by a "National Down Payment' policy which reduces maximum allowable LTVs for 1-unit primary residences;
- 95% is the maximum LTV, CLTV, HCLTV for manually underwritten loans;
- 97% is the maximum LTV, CLTV, HCLTV for DU underwritten loans, including MyCommunityMortgages® and Flex mortgages;
- CLTV of 105% with Community Seconds® is still allowed;
- 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.
Bryan, thank you for the information, it is a great post!
Wow, thanks for the great news. I am in the process of buying some investment properties and this will really help out.
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.
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
I hear ya John those same thoughts crossed my mind as well.