The announcement from FHFA that it will begin to allow the GSEs to finance loans with as little as 3 percent down payments has been met with mixed reviews.
Some see it as an important step to get more first-time buyers into the market, while others see it as a step down toward the loose lending standards that brought down the market in the mid 2000s. Director Mel Watt said in a speech that “the guidelines will require that borrowers have compensating factors – such as housing counseling, stronger credit histories, or lower debt-to-income ratios – in order to make the mortgage eligible for purchase by Fannie Mae or Freddie Mac.”
