New loan policies for Fannie Mae

Fannie Mae to institute new policy on down payments
Nashville Business Journal, Monday, May 19, 2008

In an effort to help get the housing market back on its feet, Fannie Mae, the largest buyer of U.S. home loans, will begin following a new policy on down-payment requirements for conventional, conforming mortgages that it purchases or guarantees. The change takes effect June 1.
The Washington, D.C.-based company will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its automated underwriter system. For loans written outside the system, the maximum loan percentage will be 95 percent.
The down-payment requirements of 3 or 5 percent will apply to loans for single-family, primary residences. Down-payment requirements will vary for other types of occupancy, property and transactions, Fannie Mae said.
"This new down-payment policy reinforces our goal to support successful homeowning, not just homebuying, as we seek to bring liquidity to all communities and help the housing market recover," said Marianne Sullivan, Fannie Mae's senior vice president in charge of single-family credit policy and risk management, in a statement.
The new policy will replace the one that was adopted last December requiring higher down payments in markets where home prices are declining.
Fannie Mae (NYSE: FNM) reported a $2.2 billion loss in the first quarter ending March 31, compared with a $961 million profit a year ago. On a diluted share basis, Fannie Mae lost $2.57 compared earnings of 85 cents a year ago.
The company said it is planning to raise $6 billion in new capital.