For starters, Freddie, Fannie and the mortgage insurance industry have developed sophisticated credit analysis software that can predict the likelihood of default far more accurately than anything they've had before. The answers have gotten complicated over the past few years. What's really going on here? Isn't a down payment - even of modest size - an essential part of any mortgage? Doesn't a home buyer demonstrate a commitment to paying back a mortgage by investing his or her hard cash? Isn't it true that home buyers with little financial stake in a property are far more likely to default on payments and go to foreclosure? Some loans have come with slightly higher interest rates or fees compared with conventional mortgages. Fannie Mae officials confirm they have been doing the same.Įxecutives of both companies say the nothing-down loans have been made to borrowers with excellent credit profiles and all carry private mortgage insurance designed to cover Freddie's and Fannie's heightened risks. Although Freddie Mac says the final details of its full-scale program are still being worked out, the company confirms that it has been selectively purchasing zero-down-payment mortgages up to $252,700 from large lenders.
