Recap -- Fannie Mae is the now government owned company that sets lending standards and buys mortgages from lenders. Also heavily blamed for the real estate crisis and resulting recession.
Previously lenders had to put 5% down of their own money and could use gifts and grants from non profits for more of a down payment. Their was an exception for those who made a down payment of 20% - all the funds could be from a non profit.
Now, since many require a 10% down payment minimum, people are finding it harder to raise funds.
There is a limit on the properties one can use this new exception for - single family homes, condominiums, etc. and a limit on how high the loan balance can be.
Fannie Mae is also getting tougher on the debt to equity ratio accepted - down to 45% from 55%. - This is excellent. In Financial Management (EMAN 361 with Prof. MacLeod) we learned to evaluate a company based on ratios and found that the debt to equity ratio is one of the most important. A high ratio means that the company has more debt than equity for financing and is therefore riskier (debt payment must be paid and are a major liability. equity payments (dividends) can be waved in a year the company is not doing well and therefore will not default).
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