Fannie Mae, the mortgage-finance company under U.S. government control, will no longer bar real- estate investors from qualifying for its loans if they already own four properties as it seeks to increase housing demand.
The company will expand its limit for investor and second- home loans to as many as 10 properties per borrower, according to a Feb. 6 notice to lenders on Washington-based Fannie’s Web site.
According to the new guidelines the borrower cannot have any history of bankruptcy or foreclosure within the past seven years, cannot have any delinquencies (30-day or greater) within the past 12 months on any mortgage loans, and must have a six month reserve (two months for some second homes).
Also nice to note, maximum loan to value ratios of 75% for one unit properties and 70% for multi-unit purchases.
∙ Fannie to Expand Mortgage Rules for Realty Investors [Bloomberg]
∙ Updates to Multiple Mortgages to the Same Borrower Policy (pdf) [Fannie Mae]
Congratulations Ester, you’re back in business.
Probably a good move considering the requirements to qualify but interesting commentary from Fannie that there isn’t enough demand in the market from individual homebuyers even with the price drops so far.
What effect will this have on interest rates, if any?
What is the limit on purchase price???
Finally…something good is happening. There has been so much talk of relief, such as small biz, student loans, but this is the first step I have heard of that could actually help RE investors.
The lending environment for investors is so hostile now, they are preventing good deals from responsible investors from happening. And that ain’t helping the housing market.
They also need to figure out a way to bring back low doc loans. Remember, low docs have been around for over a decade, and many investors, people w/o w-4 income, retirees, etc have used them responsibly. Right now a sizeable chunk of the home buying public cannot get loans.
diemos,
thanks, and I actually do have something in mind. Not in SOMA, in RH again.
a 900 sq feet 1/1 right off Hyde, in a two unit TIC for $499K.
Hard to resist. I am going to check the ss for 1/1 rental today.
As a taxpayer/bank owner I heartily approve of this program. As long as some knife catcher is willing to put their own money in a first loss position we might as well take their cash.
As long as the appraisals are reasonable, I think this is a good idea, as well.
Great, let’s fund another real estate bubble, with tax payers money this time.
“let’s fund another real estate bubble”
There aren’t enough people with 25% to put down to create another bubble. This is just a way of extracting some cash from some knife catchers.
“with tax payers money this time.”
For the most part, on the taxpayer side of the ledger, this will involve exchanging a defaulted loan for a new loan and some cash. It’s a net win for the government/banks/taxpayers.
ester,
i’ve seen this unit(if it’s the one I’m thinking of), pretty nice. great location (though steep hill). Seems like a good deal.
They also need to figure out a way to bring back low doc loans
no they don’t. investors can qualify with full documentation or not at all. we’ve had enough liar’s loans.
Remember, low docs have been around for over a decade,
so during boom times.
and many investors, people w/o w-4 income, retirees, etc have used them responsibly. Right now a sizeable chunk of the home buying public cannot get loans.
a full doc loan can be structured differently for investors and those who own businesses, etc, but still remain full doc.
a full doc loan doesn’t require a w4. I’d be fine with the last 4-5 years of tax statements, 1099’s, asset verification, etc etc etc.
a retiree can easily get a full doc loan, if they put up the info.
of course, lots of people don’t like full doc because
1) they can’t lie
2) they can’t hide income from the Federal govt to avoid taxation
there are many responsible users of the low doc loans. And they are massively overwhelmed by those who use them poorly.
a pity, but nothing we can do to change that. (except require full documentation).
what, it’s too hard to prove your income? then you can’t have the house. too hard because your income is “complex”? that’s ok, there are mortgage PROFESSIONALS who can sift through it
DANRH,
that is the one. However, it is a little hard to believe that this lower unit is the same sq feet as the upper one, but that is what the listing agent is telling me.
what do you think??
Ex-sfer- let’s see the banks create alternative ways to evaluate assets and income. They are the ones that created low docs, not their customers.
I agree there were abuses, especially in the last few yrs, but these loans have been around before the boom and worked fine.
The banks income to debt ratios are a one size fits all, and disadvantages small biz owners, investors, etc. The banks have been too dam lazy to look at the entire financial picture.
Example: I own/live in a 2 unit bldg (now condos.). With the rental income offset my mortgage is zero. I also sold another condo in 05, and cleared $500k in profit w/o any taxes taken. I have no consumer debt and spend maybe $30k per year on all my expenses. As far as I’m concerned I have over 10 yrs of income reserves. Will a bank allow me to refi another property, take cash out and buy something new? Not these days. In the past I could do that. I put 25% down and have 740+ credit plus reserves. Today this will not work. And that is a problem which the banks need to address.
So in other words, restoking speculation is the solution to house prices.
FED Reserve prints money and gives it to the speculators for free. FED policy is using speculators as the mechanism to prop up home prices.
Pathetic and stupid, it won’t work.
In addition to my above posting, rents are dropping which pulls the rug on price/rent valuation models.
This is still a liquidity trap -only in a different form.