Fannie Mae Reverses Decision on Declining Markets
In surprise move, Fannie Mae has reversed its policy on down payments in declining markets. The earlier policy move forced home buyers to put extra money down, 10%, to buy a home.
The new policy puts the down payments at 3%-5%, though mortgage insurers won’t do 97% loans any more.
Washington-based Fannie (FNM, Fortune 500) says the move is part of its effort to help resuscitate the flagging mortgage market.
This actually makes a little bit of sense as declining markets become a self-fulfilling prophecy, especially if loans are harder to get. This is the first sign of credit loosening in the mortgage markets.
On a related note, I’m getting feedback from buyers and real estate agents in Las Vegas that there is a buying frenzy on bank owned homes. One
client I’m working with is facing multiple offer situations on every home he’s bid on. His agent claims this is common in the area. Buying sentiment has shifted positive as prices have come down.
I’m hearing the opposite in Salt Lake, though builders have really come down on price. That seems to be where the deals are. In a year, existing home sellers will start to understand where they need to be on price. Days on market has nearly doubled in the first quarter…up to 58 days from 29 days a year ago.