Fannie Mae, scrambling to meet congressionally imposed goals, has announced new guidelines that make it easier for lenders to make home loans to families with low and moderate incomes.

The changes, announced last week at the Western Secondary Mortgage Market Conference in San Francisco, involve more lenient eligibility requirements and loan underwriting guidelines, Fannie Mae said.

"These changes will give people who live in central cities more opportunity to own a home and make it easier for mortgage lenders to make more home loans in city neighborhoods," said Larry Dale, executive director of Fannie Mae's national housing impact division.

Pilot Program in Oakland, Calif.

At the same time, Fannie unveiled a new program in Oakland, Calif., to finance $1 billion in affordable housing over the next five years. The program will serve as a pilot for a "broader effort for central city lending" that Fannie intends to carry out over the next few years, according to a Fannie Mae release.

The program, called House-Oakland, brings together all of Fannie Mae's affordable lending programs, and some new ones tailored to Oakland, under one umbrella for residents of three to six specific neighborhoods in the city. The neighborhoods will be chosen by city officials.

The changes come as the agency strives to meet the so-called 30/30 goals imposed last year by Congress.

Under that law, Fannie must seek to ensure that 30% of the loans it purchases are for low-and moderate-income housing. In addition, 30% of the loans should be for housing in central cities.

There are 544 areas defined as central cities by the federal Office of Management and Budget, based on population, employment, and income criteria.

Both Fannie Mae and Freddie Mac have said they expect to meet the goals but Freddie has lobbied for more time.

The most significant change among those announced by Fannie is the inclusion of entire cities as areas eligible for the Community Home Buyers program. Previously, the program was limited to individual census tracts identified as low- and moderate-income neighborhoods within large cities.

This change makes a vastly larger number of people eligible for the program, Fannie Mae's chief executive said.

"It's a growing of the pie of eligible homebuyers," said James Johnson, Fannie Mae's chief executive, in a speech before the conferees.

Fannie Mae also reduced the maximum income borrowers may have and still participate in its 3/2 Option plan. The new ceiling is 100% of the area median, down from 120%. The plan allows borrowers to put only 3% of their own cash down and use gifts or loans to make up the rest of the 5% minimum down payment.

While that lower ceiling makes the plan more restrictive, a spokesman said it was another part of Fannie's efforts to focus its low-income lending programs on people specified by Congress.

Meeting CRA Requirements

Fannie Mae pointed out that the changes would help leader meet Community Reinvestment Act requirements.

For borrowers, the changes allow people to establish creditworthiness outside of the usual credit-history reporting system. Potential borrowers may use rent receipts, phone bills, and tax payments instead.

Mr. Johnson said the changes acknowledge different lifestyles and savings patterns in minority populations and should make more minorities eligible for home loans.

The new changes also include a "second look" policy under which problem loans are reviewed before a lender is asked to repurchase a loan Fannie Mae has bought.

Homebuyer education for borrowers in the neighborhood lending programs is waived if the family has owned a home before, has 5% of its own cash as a own payment, and has a two-month reserve of all mortgage, insurance, and tax payments.

Mortgage insurance fees were reduced for some buyers and all borrowers living in central cities regardless of their income, will be allowed to have only a 5% down payment.

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