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The recent events in the financial industry does not have any thing to do with the absence of Fannie Mae and Freddie Mac 100% mortgage products. An 80/20 is a 100% mortgage the only difference is that on an 80/20 you do not pay Mortgage Insurance. In Jan of 2008 Fannie Mae published a list of counties by State that showed a decline in property values where a reduction in maximum loan to value was reduced by 5%. This is what promulgated the Mortgage Insurance companies to initially update and change there guidelines to reflect this change.
In April or May of 2008 the Mortgage Insurance Companies went further and made wholesale sweeping changes to there insurance guidelines stating that loan products that allowed 100% financing had a much higher rate of default than those loans made with at least 5% down. Because of this the Mortgage Insurance Companies stopped insuring residential mortgage loans above 97% LTV.
In the future when home prices stabilize the Fannie Mae and Freddie Mac 100% loan products may come back. I would think in light of the recent events that the guidelines will be tougher, but I believe they will come back.
Veterans who are eligible can still get a 100% VA loan. Properties that are located in the USDA “Green Zone” are also eligible for 100% financing. Contact a mortgage professional for assistance to see if you qualify.
In light of recent events in the financial industry, I heard that 100% mortgage loans will become non-existent. If that turns out to be true, will the 80/20 type of loan cease to exist also since it is considered to be 100% financing?