Fannie Mae and Freddie Mac have announced new low-downpayment mortgage programs geared primarily toward the first-time home buyer market.
In an official statement responding positively to the plan, NAHB Chairman Kevin Kelly said:
“NAHB commends Fannie Mae and Freddie Mac for instituting new loan guidelines that will allow creditworthy borrowers to obtain mortgages with a downpayment of 3 percent. One of the biggest obstacles to achieving homeownership is the ability to come up with a downpayment. By reducing upfront cash requirements while establishing tough but fair underwriting guidelines that include a number of safeguards, Fannie and Freddie will open the door to homeownership for more American families, particularly first-time home buyers and younger households.”
Federal Housing Finance Agency Director Mel Watt, whose agency regulates Fannie Mae and Freddie Mac, said: “These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices. To mitigate risk, Fannie Mae and Freddie Mac will use their automated underwriting systems, which include compensating factors to evaluate a borrower’s creditworthiness.”
Major media outlets reporting on the developments noted that Fannie Mae and Freddie Mac’s new programs to purchase mortgages with 3 percent downpayments would enable more creditworthy borrowers who lack the funds for a large downpayment to be able to obtain a home mortgage.