Fannie may curb low-down-payment mortgage buys

|About: Fannie Mae (FNMA)|By:, SA News Editor

Its eye on a recent uptick in low-down-payment mortgages, Fannie Mae (FNMA.OB +8.3%) is considering curbing purchases of mortgages requiring just 3% down. Unlike Freddie Mac (FMCC.OB +7.2%) which stopped buying anything with less than 5% down years ago, Fannie never stopped accepting the paper.

As the FHA has backed away from the business of late, private mortgage insurers (RDN, MTG) have stepped in, making it possible for lenders to offer reasonably-priced high LTV loans that can be sold to Fannie.

Fannie doesn't disclose the numbers, but MGIC Investment (MTG) said its 3%-down loans accounted for 5% of business during Q2 ($480M), up from 2.8% a year ago.