Fannie and Freddie unveil mortgages with low down payment

Here’s an excerpt from The LA Times about Fannie Mae’s and Freddie Mac’s new conventional product. 

Hoping to broaden the pool of home buyers and boost the real estate market, Fannie Mae and Freddie Mac are launching mortgage programs with down payments as low as 3%.

The move, targeting buyers with good credit but little cash, has drawn fire for encouraging the kind of risky lending that caused the mortgage meltdown and financial crisis. But Fannie and Freddie executives said the programs contain proper safeguards.

The loans, unveiled Monday, reverse a trend of tighter lending standards by the government-sponsored mortgage giants since their taxpayer-financed bailouts. The programs allow only fixed-rate loans on single-family homes used as a primary residence.

“We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers,” said Andrew Bon Salle, executive vice president for single-family underwriting, pricing and capital markets at Fannie Mae.

– LA Times

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