Company News: Fannie Mae reduces payment requirement

By relaxing down-payment requirements for borrowers in markets where home prices are falling, Fannie Mae aims to both resuscitate the flagging housing market and respond to pressure from industry groups, consumer advocates and lawmakers.

It’s a balancing act that critics and investors worry exposes the company to more risk, as foreclosure rates spike and home prices keep falling.

Washington-based Fannie Mae said Friday it will require minimum down payments of 3 percent for loans made through its computerized underwriting system.

The new policy, effective June 1, replaces a December one that required a 5 percent down payment for home loans in areas with declining real estate prices.

Fannie Mae predicts U.S. home prices will drop 7 percent to 9 percent on average this year.

A Freddie Mac spokesman said the McLean, Va.-based company earlier this month adjusted its policies to make 5 percent down payments available in declining markets.

“Classified ad Web site Craigslist is denying online auctioneer eBay‘s allegation that it unfairly diluted eBay’s stake in it and says its board was acting to protect the company.

Craigslist, based in San Francisco, filed a response in Delaware’s Court of Chancery on Thursday to the lawsuit eBay filed last month.

The filing says founder Craig Newmark and chief executive Jim Buckmaster did some of the things eBay sued over, like creating a new shareholder rights agreement.

But it said those moves are protected by laws that give directors discretion to act in their company’s best interest.

Craigslist filed a countersuit this week in state Superior Court in San Francisco alleging the online auctioneer broke state and federal antitrust laws.

San Jose, Calif.-based eBay, owns a 28 percent stake in Craigslist.

“Mortgage Lenders Network USA Inc. says its needs more time to negotiate a Chapter 11 plan so it can work out a deal with its largest secured creditor, GMAC‘s Residential Funding Co.

Key meetings are scheduled for the coming weeks that may set the stage for a Chapter 11 plan settlement among creditors, lawyers for Mortgage Lenders said in papers filed Thursday in the U.S. Bankruptcy Court in Wilmington, Del.

Those meetings could end in resolutions that ease the end of its bankruptcy liquidation, which has been caught up in fights between creditors, Mortgage Lenders said.

The defunct Connecticut company filed a Chapter 11 plan proposal in March, setting out how it plans to distribute cash raised in its bankruptcy liquidation to creditors.

In new court papers, the company asked for an extended period during which it alone is allowed to put a Chapter 11 plan on the table for discussion.