YOUR MORTGAGE : Fannie Mae Moves to Ease Affordability Crisis : Credit: New plan loosens lending requirements, but some experts question whether it will help borrowers.

The nation’s biggest source of mortgage money has unveiled a new plan that could make it easier for borrowers to get loans with small down payments, but housing experts are split on whether it’ll help many borrowers.

As part of its efforts to help solve America’s housing affordability crisis, the Federal National Mortgage Assn. (Fannie Mae) has announced a plan designed to encourage lenders across the country to make more 5%-down loans.

In an important move, Fannie Mae’s new “3/2 Option” program also loosens some of the credit requirements that previously have prevented thousands of cash-strapped buyers from qualifying for a mortgage.

Perhaps the most significant change under the new program is that the buyer technically must come up with a mere 3% of the down payment. The remaining 2% can come from a family member or nonprofit agency.

Previously, help from an outside source was frowned upon by lenders.

“This is another step we’re taking to expand homeownership opportunities for all Americans, especially low- and moderate-income buyers,” said Martin D. Levine, a Fannie Mae senior vice president.

Fannie Mae is a key player in the nation’s mortgage market. It buys home loans from lenders, pools them and then sells shares in the pools to investors.

This process gives banks and savings and loan associations the cash they need to make more home loans.

Since lenders who want to sell their loans to Fannie Mae must meet the agency’s guidelines, the new, looser policies will “filter down” to borrowers and make it easier for them to get loans.

Significantly, part of the new program will allow lenders to make loans to borrowers who have relatively high levels of debt.

Previously, Fannie Mae usually wouldn’t buy a loan if more than 28% of the borrower’s gross monthly income went toward the mortgage payment or if more than 36% of his income was eaten up by mortgage payments and all his other debts.

Now, a borrower can still qualify if up to 33% of his gross income goes toward the mortgage and up to 38% of his paycheck is used to make mortgage payments and pay off other debt.

Those figures can go even higher for borrowers with excellent credit records or people who have consistently made unusually high rental payments.

Still, it’s the new program’s 3/2 feature that is expected to help borrowers the most--especially those who live in high-cost housing areas such as California and the East Coast, where down-payment costs are unusually large.

“A lot of two-income couples could manage to make relatively high monthly payments, but they just can’t save up the thousands of dollars they need for a down payment,” said Leslie Appleton-Young, an economist for the California Assn. of Realtors.

“Now that they can get help from their parents without being penalized, you’ll see a whole new class of first-time buyers materialize.”

Appleton-Young can’t estimate how many Californians will be helped by the new program, but officials at Fannie Mae say that the 3/2 loan and related programs could help as many as 150,000 Americans purchase a home.

Some lenders, however, say that the 3/2 has a few shortcomings.

“If you finance 95% of your purchase, your monthly payments are probably going to be pretty high,” said Dwain Greer of Shearson Lehman Mortgage. “And if you need help from your folks to make such a small down payment, you probably don’t have high enough income to qualify for the loan.

“It’s sort of a Catch-22,” Greer said. “The people who need the program most probably won’t be eligible for it.”

Even borrowers who earn enough money to qualify for a 3/2 loan will have to pass another hurdle: Their credit record will have to be near-perfect.

“If you’re looking to finance 95% of your purchase, the lender is going to go over your credit report and the rest of your application with a fine-toothed comb,” said Tom Criser, a mortgage broker and president of The Lenders Center in Thousand Oaks.

“Your credentials will have to be sterling, or you’re not going to get the money.”

Borrowers who want to take advantage of the 3/2 program will find other strings attached.

First, all applicants must sit through a counseling session conducted by an approved loan expert. The course is designed to teach them more about the responsibilities of being a homeowner, including sessions on budgeting and maintenance.

In addition, home buyers won’t be able to borrow more than $191,250 under the program, a limit that’s set by Congress.

And besides their down payment, each borrower will have to purchase a private mortgage-insurance policy that will reimburse the lender for at least part of its losses if the loan goes into default.

The first-year premium on the policy will be equal to about 1% of the amount that’s borrowed.

Fannie Mae’s introduction of the 3/2 program overshadowed another announcement it made about the same time.

The agency said it plans to pump at least $1 billion into worker-employer “home-buying partnerships.”

Under the typical partnership program, an employer could provide the worker with part of the down payment, supplement monthly mortgage payments or provide some other type of assistance. The lender who makes the loan could then sell it to Fannie Mae.

The program “will help employers retain their best employees and improve the quality of their new recruits,” Levine said, adding that it could help up to 20,000 people buy a home.

AVERAGE RATES FOR RESIDENTIAL MORTGAGES Average rates for residential mortgages as of Dec. 28, 1991.

Survey Conventional Mortgages Adjustable Mortgages Area 15 Year 30 Year Composite 1 Year Composite National 9.34% 9.61% 9.48% 7.38% 7.69% California 9.59 9.86 9.73 7.92 7.85 Connecticut 9.32 9.60 9.49 7.30 7.54 Wash. D.C. 9.21 9.50 9.37 7.08 7.30 Florida 9.34 9.64 9.50 7.34 7.72 Mass. 9.33 9.58 9.46 7.38 7.81 New Jersey 9.30 9.57 9.45 7.37 7.83 N.Y. Metro 9.38 9.65 9.53 7.42 7.80 New York 9.49 9.75 9.63 7.51 7.86 N.Y. Co-ops 9.67 10.00 9.90 7.74 8.17 Pa. 9.08 9.36 9.22 7.26 7.45 Texas 9.27 9.47 9.37 7.41 7.57

SOURCE: HSH Associates, Butler, N.J.