Fannie Mae, responding to congressional pressure, expanded its Community Home Buyers program to 544 central cities and announced several other changes that also should make it easier to securitize inner-city mortgages.

Besides increasing eligibility, the agency: * trimmed mortgage insurance fees for borrowers using the so-called 3/2 option; * waived mandatory home buyer education and counseling in some cases; * created a "second look" policy to review Community Home Buyer's loans within Fannie Mae, thus slashing the odds that a seller/servicer might have to repurchase a loan sold to Fannie: and * decided to consider exceptions to Fannie Mae's "declining market" policy in neighborhoods where community reinvestment efforts are under way. * Larry Dale, executive director of the Federal National Mortgage Association's National Housing Impact Division, noted that Fannie Mae already had a special program for residents of particular neighborhoods who had incomes up to 140% of the area?s median income. The special Community Home Buyers underwriting guidelines, available to seller/servicers who use the agency's FannieNeighbors program, required only 5% down payments on home mortgages.

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