Fannie Mae Helping Out in Hard Hit Housing Markets

Fannie Mae, the government mortgage financing arm, has decided to help out the hardest hit housing markets in the US, where home prices are seeing record lows, in hopes of helping encourage home buyers or potential home buyers to ignore all the negative housing and mortgage hype and news and take the plunge to buy their first home or even just to buy homes who are already existing home owners.

The mortgage financing organization said that it would drop its minimum down payments to between 3 to 5 percent in the zip codes that have been identified as those that are the most desperate for home sales and have the worst (lowest) housing prices in the designated areas of determination. This is in conjunction with the federal government’s attempt to ease American’s housing and economic woes by cutting federal interest rates several times over the past several months, as well as issuing the economic stimulas tax rebates that are designed to help stimulate people into buying again.

This may seem that it is in direct conflict with a call to tighten lending standards which was called for not only by the federal government but also by consumer rights activists who felt that many people would not be in such a bind as they are now had they not been knowingly given loans they couldn’t financially handle in the end.

And it actually is, however, many of those behind the scenes additional steps have not been scrapped to determine a person’s true abilities to financially pay back loans and extension loans, but the fact that people are not required to put such a huge chunk of change down on a home may stimulate the house buying market since they don’t have to use their entire savings potentially just to become homeowners. For information on how to properly calculate a mortgage payment, see our complimentary mortgage calculator.

This is the key – the banks still need to closely look at salary information and income to debt ratios, but if they can somehow still entice the consumer to buy a home without a large downpayment, I think this is still a safe way to get more people to buy homes without putting themselves in a tremendously burdensome financial quandry where they have to choose between paying several bills or none at all.