Fannie Mae Relaxes Requirements for Loan Repayments

Government sponsored enterprise; Fannie Mae has decided to set a single national standard for downpayments on mortgages it buys in a bid to stimulate the housing market.

Announcing the move on Friday, the company will accept downpayments as low as 3.0 percent for single family, primary residencies in all U.S markets on loans it purchases. The initiative is to begin on June 1.

James Lockhart, director of the Office of Federal Housing Enterprise Oversight delivering a speech at a Federal Reserve Bank of Chicago conference commended the move.

"Fannie Mae's new downpayment policy is a sound move that could help unfreeze the U.S housing market and uncover pent-up demand for mortgages. It's still sound underwriting and makes sense in this type of market," he said.

U.S home prices have plummeted nearly 16 percent from their June 2006 peak, according to the Standard & Poor's / Case-Shiller index of 20 metropolitan areas.