Fannie Mae Plans to Purchase Mortgages with 3% Down Payment


The CEO of Fannie Mae, Timothy Mayopoulos, said that the company is working in close cooperation with the Federal Housing Finance Agency to offer mortgages with loan-to-value ratio of 97% to the lenders that use its services. He made this announcement in a speech at the MBA Annual Convention & Expo.

Fannie Mae will be able to buy mortgages with down payment as low as 3% due to the reduced risk. The CEO of the company explain that it will venture into these deals safely and responsibly thanks to the higher quality of underwriting and the improvements which of the Representation and Warranty Framework which will be made in the near future. Mayopoulos explained that under the new framework the government sponsored enterprise is able to review more mortgage loans closer to delivery.

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The announcement of the plans for the purchase of mortgage loans with LTV of 97% by Fannie Mae came after the speech of the FHFA director, Mel Watt, a the MBA Convention & Expo. Watt said that FHFA was working together with both Fannie Mae and Freddie Mac towards the development of sensible and responsible guidelines for mortgage loans with LTV between 95% and 97%. He shared that the new guidelines will enable the two government sponsored enterprises to serve borrowers with lower down payment when compensating factors are taken into consideration.

The new guidelines will provide clear definition of the life-of-loan exclusions set under the Representation and Warranty Framework. This will enable mortgage lenders to understand when Fannie Mae and Freddie Mac will apply these exclusions. Currently, according to Watt, the lack of clarity is forcing lenders to impose credit overlays which push up the cost of lending and to restrict lending to consumers who have less than perfect credit score or less conventional financial solutions.

More details on the guidelines which will ease borrowers’ access to mortgage credit will be announced in the coming weeks.



Christian Calvin mortgage Christian is a contributing writer for He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.


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