Banks have been fair in their loans requiring a responsible down payment policy. However the mortgage brokers are unregulated and initiated irresponsible loan incentives, such as little or no money down loans. They sold the concept of real estate as value that could only go up.

We know different now.

Now Fannie Mae has re-entered and stepped into the picture. Fannie Mae today withdrew its declining market policy and adopted uniform national down payment requirements. This they say is making financing more affordable and available and stabilizing the credit markets, said the National Association of REALTORS®.

Fannie Mae took action to remove the extra 5 percent down payment on homes. Fannie Mae will be replacing the existing policy that required higher minimum down payments for properties in markets that are considered declining, for a policy that allows buyers to borrow up to 97 percent loan-to-value, even in markets in which prices have declined.

With little “skin” in the game, homeowners will be severely tested if market values decline further. The temptation will be to walk away from homes that experience a decline in market value when compare to the loan amount signed.