Government-sponsored entity Fannie Mae (FNM) announced in a memo dated from Wednesday that it has relaxed its underwriting rules for certain cash-out refinance activities for borrowers with Fannie-held mortgages. These "flexibilities" will include a relaxed eligibility criteria, as well as reduced documentation requirements, according to Fannie. For loans with a loan-to-value ratio less than or equal to 80 percent, Fannie will not require the 580 minimum credit score. High-balance ARM loans with an LTV ratio less than or equal to 80 percent similarly will not be subject to the 680 minimum credit score. Loans up to 80 percent LTV can be used on second homes, cooperative units or investment properties now, whereas these transactions were restricted to 75 percent LTV ratios before. Fannie also relaxed the employment documentation requirements to one current pay stub, a verbal verification of employment and one year's federal income tax return.