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High LTV Conforming Loans not Threatening FHA

Monday, December 7, 2015

The government sponsored enterprises'' (GSE's) introduction of 97 percent loan-to-value (LTV) mortgages, implemented by Fannie Mae' in late 2014 and by Freddie Mac in the spring of 2015, has apparently done little damage to the government guarantee sector's dominance in that market place.  Black Knight Financial Services' most recent Mortgage Monitor points out that the Federal Housing Administration (FHA) and the Veterans' Administration (VA) loan programs have continued as the primary drivers in that expanding segment of purchase mortgage lending.

Low downpayment lending, that is mortgages with a 95 percent or higher LTV ratio, were up 20 percent in the third quarter of 2015 compared to the same period in 2014 while the overall purchase market expanded by only 13 percent.  Despite this increase the GSEs' new products garnered only 3 percent of those low down-payment originations.

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