Fannie Mae just announced a withdrawal of their declining market policy! To quote from Announcement 08-10, “Lenders are no longer required to make a downward adjustment to the LTV, CLTV, or home equity CLTV (HCLTV) based on the location of the property.” Yes, you are reading correctly; no more 5% declining market reduction, at least for Fannie Mae loans! But hold on, let’s not get too excited yet. I’ll explain in a second, but let me give you a brief summary of the Announcement first. Per Fannie Mae Announcement 08-10, dated May 16, 2008:

1. Fannie Mae withdraws their declining market policy effective 6-1-08;
2. Declining market policy is replaced by a “National Down Payment’ policy which reduces maximum allowable LTVs for 1-unit primary residences;
3. 95% is the maximum LTV, CLTV, HCLTV for manually underwritten loans;
4. 97% is the maximum LTV, CLTV, HCLTV for DU underwritten loans, including MyCommunityMortgages® and Flex mortgages;
5. CLTV of 105% with Community Seconds® is still allowed;
6. Effective date is for applications taken on or after June 1, 2008.