Fannie Mae reversed a recent decision to cut loan-to-values in declining markets.
An announcement today indicated maximum LTVs of 97 percent using Desktop Underwriter will apply to owner-occupied single-family properties in all geographic locations -- including declining markets. For manually underwritten conforming loans, the maximum LTV is 95 percent.
The update is a reversal of a Dec. 5 announcement from the Washington, D.C.-based company that required LTVs to be cut 5 percent in declining markets.
The latest DU risk assessment model reportedly limits risk layering and assesses each loan more precisely, enabling the easing.
Operational and system changes required by the latest pronouncement will be implemented over the summer, Fannie said.
The secondary lender said in the December statement that "current home price trends indicate that home values continue to decline in many markets across the country."
Today's press release suggested the easing is part of a bigger overall plan to bring liquidity to the housing market, though down payments and equity levels are still considered critical factors in projecting performance.