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Fannie Mae to accept lender-funded down payment assistance

Fannie Mae will now buy mortgage loans with lender-funded grants, including down payment assistance, closing costs or financial reserves.

The change could give nonbank lenders a way to guard against redlining accusations.

The government-sponsored enterprise will start accepting such loans immediately. According to Fannie Mae’s guidance, “The lender must have a documented program that provides grants for low- to moderate-income borrowers, community development, equitable housing initiatives, or similar initiatives.”

Lender special purpose credit programs — tailored to benefit underserved groups — would fit the bill. There are, however, a number of additional caveats for a details ⇒

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