Everybody's answer to your question is their perspective relative to their profession. Yes, you will have to come up with more money for a down payment if your home is listed in a 'declining market area". As for closing costs...no you won't have to pay more closing costs.
Replaces Policy Regarding Markets Where Home Prices are Declining. The new national down payment requirements of 3 or 5 percent will apply to loans for purchase of single-family, primary residences.
I agree with Larry regarding the definition of a declining market. However, here in Michigan it's been a declining market for the past several years. Many lenders have declared this a declining market and will not approve 100% financing. The major lenders in the area are requiring at least 5% down with a conventional mortgage and 3% with the FHA financing. With the uprise of foreclosures, lenders want to see some commitment into the home from a buyer. If they have some money invested, they might not be so willing to "walk away" from the property.
If you have anymore questions feel free to drop me a line.