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Fannie Mae plays Let's Make a Deal

FANNIE Cuts FHA-Like Deal to Sell Homes 


Even as Fannie Mae tightens standards on most new mortgages, the government-sponsored enterprise is offering buyers of its repossessed homes financing with some of the most generous terms available today. 


Fannie’s HomePath program lets borrowers put down as little as 3%, without paying for mortgage insurance, which is usually required for conforming loans where the borrower has less than 20% equity. HomePath also accepts borrowers with credit scores as low as 660 — 60 points below Fannie’s standard cutoff. Appraisals, a traditional prerequisite for getting a mortgage, are optional under HomePath.


The program underscores Fannie’s motivation to clear its inventory of homes, which swelled 36% last year, to 86,155. 


“Only time will tell if the risk is worth the reward, but Fannie is giving up little to eliminate a nonproducing asset,” said John Dutra, a mortgage broker in Fremont, Calif. “Once closed, Fannie has a productive loan again,” instead of an empty house that is not generating cash.

By: Kate Barry - America Banker

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