As of June 1, Fannie Mae will drop its blanket “bigger down payment in declining market policy” as it rolls out a new algorithm to better screen loans at the individual level.
Under the new policy, borrowers approved by Fannie Mae’s automated underwriting program will be able to borrow up to 97 percent of the value of their homes, the company said. Other loans will be accepted with loan-to-value ratios of up to 95 percent, the company said.
UPDATE: Bloomberg “Updates” and adds the bit we were looking for (and a plugged-in reader already found):
Borrowers will still need to find mortgage insurers that will accept the loans…[as the] companies are required by law to have borrowers who want to put less than 20 percent down obtain private mortgage insurance from companies such as MGIC Investment Corp. and PMI Group Inc., which have been tightening policies.
∙ Fannie Mae to Drop Down Payment Rules in Worst Areas [Bloomberg]