Breaking News: Fannie and Freddie formally announce 3% Down Programs

Breaking News: Fannie and Freddie formally announce 3% Down Programs | Keeping Current Matters Last Month, HousingWire reported that both Fannie Mae and Freddie Mac formally announced their 3% down options on home purchases. Fannie Mae’s plan was effective December 13, 2014 while the Freddie Mac plan will be available March 23, 2015. The HW article quotes FHFA Director Mel Watt:

“The new lending guidelines released today by Fannie Mae and Freddie Mac will enable creditworthy borrowers who can afford a mortgage, but lack the resources to pay a substantial down payment plus closing costs, to get a mortgage with 3% down. These underwriting guidelines provide a responsible approach to improving access to credit while ensuring safe and sound lending practices.”

This is great news to millions of purchasers that have been denied the opportunity to own their own home because of the almost impossible burden of saving for a 20% down payment.

Will these programs create future challenges?

Certain pundits fear that low down payment programs will create a wave of foreclosures down the road. Mr. Watt also addressed this concern:

“To mitigate risk, Fannie Mae and Freddie Mac will use their automated underwriting systems, which include compensating factors to evaluate a borrower’s creditworthiness. In addition, the new offerings will also include homeownership counseling, which improves borrower performance. FHFA will monitor the ongoing performance of these loans.”

Here are the direct links to the guidelines for each program:

Fannie Mae 3% Down Program

Freddie Mac 3% Down Program

Remember, as with any new program, there will be some confusion as it is unveiled. Contact a mortgage professional for a deeper understanding.

Don’t have a mortgage person yet? Contact us for a referral.

(The opinions expressed in this article are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources. All information deemed reliable but not guaranteed. You should not treat any opinion expressed in this article as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Sudy Baldwin Real Estate does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind. All information presented herein is intended and should be used for educational purposes only. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. All investments involved some degree of risk. Sudy Baldwin Real Estate will not be liable for any loss or damage caused by your reliance on information contained in this article.)

 

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