Fannie Mae to Increase Down Payment Requirement to 5 Percent

October 16, 2013  
mortgage lending news

An update to Fannie Mae's Desktop Underwriting (DU) system, scheduled to take effect on Nov. 16, includes an option that allows the system to ignore foreclosure information on a credit report if a pre-foreclosure sale is also documented.

While this change will offer lenders more leeway in underwriting and approving borrowers who previously unloaded a home through a pre-foreclosure or short sale, another DU provision could make it more difficult for some applicants to qualify for Fannie Mae financing. Specifically, the minimum down payment required from borrowers will rise to 5 percent of the loan balance from 3 percent currently.

Other provisions under the new DU guidelines include complete elimination of interest-only loans, tougher debt calculations for adjustable-rate mortgages, and a drop in the maximum loan term to 30 years from 40.

Abstract News © Copyright 2008-2013 INFORMATION, INC.
Powered by Information, Inc.

Stay Updated

Join the fight against predatory lending. Enter your e-mail to sign up for breaking news, action alerts, and CRL's original research.

   Please leave this field empty

Help Us End Predatory Lending

Predatory lending destroys family wealth, and preys on our most vulnerable communities. You can help us end abusive lending practices by donating to CRL, or by sharing our work with others.