Fannie Mae scraps higher downpayment rule

updated 10:35 a.m. ET May 16, 2008

WASHINGTON - Fannie Mae says it is doing away with higher minimum downpayment requirements for borrowers in distressed real estate markets.

The government-sponsored mortgage financier said Friday it will require minimum downpayments of between 3 percent and 5 percent for all loans that it guarantees.

That replaces a December policy that required a higher minimum if the loan was for a home in a market with declining real estate prices.

Washington-based Fannie says the move is part of its effort to help resuscitate the flagging mortgage market.

MORE FROM MORTGAGE MESS

Mortgage Mess Section Front

Housing market slump may stretch further Pending home sales fall 4.7 percent Paulson: Many foreclosures can’t be prevented IndyMac stops new loans, slash work force Fannie, Freddie rebound on capital relief Hope Now helps fewer homeowners in May Wachovia quits offering risky mortgage loan States file lawsuits against Countrywide Foreclosure rescue stalls in Senate Foreclosure relief plan advances in Senate Mortgage Mess Section Front   Add Mortgage Mess headlines to your news reader: