News item from Thurs 6/15 USA Today - Page B2
Fannie Mae Tries Out Zero-down Mortgages
Mortgage Giant's Policies Play Big Role in Lending
Washington - In a move that could make zero-down mortgages more widely available, mortgage giant Fannie Mae has started purchasing loans that cover 100% of cost.
In the past, Fannie Mae declined to participate in a mortgage that exceeded 97% of a home's value. But in response to demands from lenders that are its clients, Fannie Mae in recent months has been buying 100% mortgages on a limited, trial basis...
When Fannie Mae introduced a 97% mortgage in 1994, it stretched the limit of what was available to borrowers. But now, Fannie Mae is trying to catch up. In recent months, major lenders have announced programs that lend 103% of a home's value...
Lenders say technology in recent years has improved their ability to separate good risks from bad during the mortgage application process...
But Neil Bader, CEO of IPI Skyscraper Mortgage in New York, says he's concerned about the increase in mortgages that require no down payment...
Under Fannie Mae's 100% loan trial, borrowers are required to provide at least 3% of the purchase price to cover closing costs. Spokesman Biegel has no interest in buying 103% mortgages. "We frankly think it's a risky product for the lender, for the borrower and for us," he says.
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WTF!?!?!?! Moving from 97% to 100% mortgages is prudent business decision; but 103% mortgages? Oh no, waaaaay too risky.
This will all end very badly. |
