Fannie Mae allowing 10 investment properties

Fannie Mae allowing 10 investment properties

I just got an email from one of my lenders. Fannie Mae is easing their restrictions on investors, and allowing financing of ten properties instead of only four. Hopefully they will reduce down payment limits also.

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Thanks for sharing...

Thanks for sharing that info Al. I always thought that rule was a bad one. Same with the amount down and it only hurts the investors that need the breaks to get that deal.

Thanks again. Smiling

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outa curiosity

did you call them, and ask them bout getting loans, or how did you approach them???I am interested in finding out if I could qualify for there programs. Cause having trouble finding other lenders that could work out...thanks in advance...and by the way, i did call PMI the other day, and got my package today with the software and the cds...so thanks for answering the other day...

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That's good information!

Thanks for the update!

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10 properties

One of my money guys emailed me that too, but he did`nt say anything about the rule of not profiting off the sale inside 90 days. did they change that one also Al ??


don't know the details

I just got the email. I don't know any of the details. Maybe I will call him tomorrow.

Al

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Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
Watch your character, it becomes your destiny.

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Called my loan officer

I called my loan officer on another matter but I got talking to him and he said that you had to have so much money in cash reserves. He did not go much into it more than that.

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Quote:
"In the middle of difficulty lies opportunity. Albert Einstein


Fannie Eases Its Investor Loan Rules

(COULD THIS BE WHAT THEY ARE TALKING ABOUT?)

Fannie Eases Its Investor Loan Rules
By Harry Terris
February 10, 2009

Fannie Mae is loosening a restriction to encourage lending to property investors, a group that has been widely blamed for contributing to the housing meltdown but is also seen by many as critical to a recovery.

The government-sponsored enterprise told lenders last week that starting next month it will buy or guarantee home loans made to borrowers that have mortgaged as many as nine other properties. Currently, Fannie will not touch a loan if the borrower has financed more than three other homes.

The change is meant "to bring added liquidity to the investor segment of the market and help hasten the recovery," Fannie said.

However, the GSE, which said it wants to make more loans available to "high-credit quality, bona fide … experienced investors," is tightening other requirements for this type of borrower. Starting in June, an investor will have to hold six months of payments in reserve, rather than two months, to get a single-family loan approved by Fannie's automated system.

Since they were seized by the government last year, Fannie and Freddie Mac have been directed to put more emphasis on supporting the housing market; like other prospective homebuyers, investors have been dissuaded from making purchases by tightened underwriting standards and forecasts that prices will keep tumbling.

"Investors are often the first sign of a stabilizing market," said Joe Garrett, a principal at Garrett, Watts & Co., a consulting firm in Berkeley, Calif. "One of the things that leads the economy out of a housing crisis is when prices get cheap enough that investors start moving in and buying things. … Then the owner-occupants see that prices have stopped falling — they see how cheap prices have gotten, and they start to jump in."

Fannie also said a desire to expand the range of potential buyers for properties with tenants played a role in the new standards. Last month both GSEs said they would no longer evict tenants living in foreclosed properties and would offer them month-to-month leases instead.

Robert Simpson, the founder and president of Investors Mortgage Asset Recovery Co. LLC, an Irvine, Calif., audit and fraud analysis firm, said he was wary of easing restrictions on investor loans.

"The idea that we need to let investors back in" to shore up the housing market amounts to "an artificial bottom," he said. "Let those prices come down to the point where normal people can afford them, and you'll find buyers, but not at these inflated prices."

Basing loans on a reasonable multiple of rent would be a safe way to lend to investors, Mr. Simpson said. Right now such buyers are "catching a falling knife," with prices likely to tumble further. "The government, I think, rightfully has an interest in seeing that people own a home. … But I don't believe the government has any interest in seeing that people are successful real estate investors," he said.

Moody's Economy.com Inc. has projected that prices will decline another 11% from the fourth quarter before stabilizing at the end of this year.

David Zugheri, the co-founder and chief marketing officer of the Houston lender Envoy Mortgage Ltd., said underwriting standards are "very different" today from years past, when a loan on a tenantless property would be granted on the basis of rents in its geographic market.

For refinancings, underwriters today typically look for income from the property "to support itself and then some," he said. They also want to make sure borrowers "can stand on their own feet, even if the property is not bringing in any income at all, if it were vacant."

As a result of such changes and market conditions, Envoy is "seeing less and less investment properties," Mr. Zugheri said. When the private securitization market was operating, there was "no real defined cap" on the number of mortgages for investment homes. "People would come by with 20-plus properties."

Mr. Garrett said that "the biggest problem" in securing loans for investment properties "is the lack of equity."

"A few years ago you could've bought, as an investor, these same properties for 5% down or 10% down. Now it's more like 30% down," and in some cases 40%.

"Prices haven't fallen enough in most places for investors to come in," he said. "In areas where the prices have fallen low enough," and rental income is enough to produce "a break-even or a positive cash flow, underwriters are approving those loans."

During the boom, cash flow often got little attention, under the assumption that properties might be resold within three months, Mr. Garrett said. Now cash flows, debt coverage, leases, and the borrower's experience as a landlord and independent financial strength are scrutinized, he said. "These are actually pretty good loans."

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Hey Al, I've got a question

Hey Al,

I've got a question regarding the lift your lender e-mailed you about? You mentioned the lift from 4 to 10 and I just contacted my lender and she said Fannie only is making it easier for primary residences to get refi's not the 4/10 lift. Have you spoken to your lender yet regarding the e-mail? If so please let me know what they say:) thanks! Angie

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Fannie Mae Adjustment

The requirement of only allowing four financed property for investors has eased up. You can now have nine financed properties plus your primary loan (total 10). Requirements for the 5 to 9 are 25% down, 720 credit score, 6 months of reserves (full payment times 6) of current property plus 6 months of reserves for any other investment property/2nd home, no 30 day lates on mortgage in past 12 months and no history of bankruptcy or foreclosure.

You need 20% down on investor loans. The mortgage insurance companies will no longer insure these loans, and there are no 2nd lien lenders anymore. Rates are higher and it costs several points to get the rate.

This goes into affect March 1st. see article below

Quote:

Fannie Eases Its Investor Loan Rules
American Banker (02/10/09) P. 1; Terris, Harry
To speed recovery of the housing market, Fannie Mae in March will begin purchasing and guaranteeing mortgages for borrowers carrying loans on as many as ten other properties, up from the current limit of four. However, the number of months of reserve payments that must be held by investors will rise to six in June from two currently. "One of the things that leads the economy out of a housing crisis is when prices get cheap enough that investors start moving in and buying things," says Joe Garrett of the Berkeley, Calif.-based consulting firm Garrett, Watts & Co.

Hope this clarifies things

Beth


Angie

I did talk to my lender and what Beth said is just what I was told. It will not affect a lot of us, but at least they are starting to realize that investors can help reduce inventory of REOs and they need to make some changes to encourage this.

Al

__________________

"NOW GO FIND A DEAL"

Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
Watch your character, it becomes your destiny.

Frank Outlaw


Do I understand this correctly?

Thanks for the information!

So, if I have 4 mortgages 1 primary and 3 rentals with payments of 1000 each for simplicity purpose, I have to $24,000 cash (how about stocks?) in reserves in order to be approved for another loan (as well as 25% and 720 FICO and no lates, etc)? or actually would it be $30,000 assuming new loan also $1,000..6 months for that too?

Kate

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Thats what I

Thats what I got out of it too. Are they really requiring 6 months reserves for all your properties plus your next investment property to qualify for the loan?

Ron

lovebargains wrote:
Thanks for the information!

So, if I have 4 mortgages 1 primary and 3 rentals with payments of 1000 each for simplicity purpose, I have to $24,000 cash (how about stocks?) in reserves in order to be approved for another loan (as well as 25% and 720 FICO and no lates, etc)? or actually would it be $30,000 assuming new loan also $1,000..6 months for that too?

Kate


4 props

so I have heard this alot, that you can only have 4 mortgages. But I know people who have way more than 4. so...How????

CBR you have more than 4, how did you do it?

thanks...

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financing multiple properties

Well this isn't the easiest thing to do but it can be done.First thing is to make sure the total cash flow[mortgage,taxes insurance ,water sewer,electric,maintenance]can be paid off monthly. include min. 5% vacancy also . Now for down payment of at least 20% on commercial property the equity in your own home is a place to start.My wife was scared but i told her "the apartment pays the {down payment loan to your second mortgage)every month so IN FACT IT COST YOU NOTHING!" An investor is another possibility also .You find and prove they can pay for themselves. Now as you develop equity in the apartment you can borrow , or take out another loan, to buy another property. MAKE SURE THEY CAN ALL STAND ON THERE OWN.Takes some guts to keep remortgaging but have proof and faith in your carefully thought out decisions and you WILL SUCCEED! HAVE PATIENCE IT TAKES TIME!
IT TOOK US 11 YEARS TO DEVELOP EQUITY IN OUR FIRST PROPERTY BUT IN YEAR 12(SAME KIND OF MARKET WERE IN NOW) WE CASHED IN $100,000 PROFIT! We took that doe put 20% on a mint 3 family and bought a piece of land subdivided it and took a $60,000 investment and turned it into$187,000! WOW! Yes IT CAN BE DONE! REMEMBER LOCATION IS IMPORTANT
GOOD LUCK, Jimbo


I get this question all of the time

Everyone gets tripped up on the whole Fannie Mae Freddie Mac restrictions. I remember when I got started a loan officer told me the same thing. I figured this one out a long time ago. Don't ever let someone bully you around by telling you that you can't do something. I didn't get in this game to only do 10 real estate deals. I got in it to do hundreds. I will probably cover this at Deans Live Event.

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Min. Loan Amounts Required

This just keeps getting better. I just talked to my mortgage broker Thursday about this and I told him that another DG member and myself had found a REO for 29k. He told me he wouldn't even touch it because the loan amount was too small. Other than my line of credit for 80k which I am holding for my own personal house which I am trying to buy, it looks like mortgage people are saying "DON'T BUY UNDER MARKET HOUSING" pay full price and get into bid wars. I don't know about you guys but this is getting frustrating. We all try to find the perfect deal, but it looks like more creativity is going to be called for. I do agree with CBR though. Don't let anyone tell you that you can't do it. Being the rebel that I am, when they say NO, I go against the grain and say why not, and go after it anyway....Jan


10 Property Limit

This 4-10 property limit sounds good, but the guidelines are quite stiff. Keep in mind these are just Fannie/Freddie backed loans and most investors don't use that type of product.

We are getting our financing through local banks who have their own underwriting guidelines and will allow as many properties as they feel comfortable with. They don't have to conform to Freddie/Fannie guidelines because they are holding their loans in house. It all depends on the borrower.

Support your local banks.

CTP


Don't get too caught up in it....

I know a man who has 150 properties.....I doubt that he cares about this regulation either way. I think I will listen to HIS advice before Auntie FANNIE......LOL..

Sam

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QUESTION?????

Does anyone have an e-mail address for Fannie or Freddie?


Hi CT

Quick question for ya..are these local banks feeling comfortable doing the loans on traditional or commercial? Thanks. Angie

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Challenges are only challenges if you view them that way. Try looking at them as OPPORTUNITIES instead and success will follow!!! "ME" Eye-wink


Does anyone know of any

Does anyone know of any banks in wa state that don't need to follow the guidelines of Fannie Mae and Freddie Mac and are investor friendly. I'm having a real hard time finding them.

Thanks


Fannie mae reo property

Hi Everyone,

I am new and am almost about to make my first offer. It is a Fannie Mae REO. Is there any thing I should look out for? There are pages and pages of paperwork, most of it I understand but some stuff is a little cloudy.

Thanks for any help.
All the Best,

Inge


Inge,

A Fannie Mae usually has a clause in it that will not allow you to sell for more than 20% of what you paid for it for 3 months. Often times you can negotiate that time frame with them or eliminate it completely, unless you are buying it at an auction, then there is no negotiating. Congrats on taking action!


Fannie Mae property offer

Thanks for the info, I will include it in my purchase offer. I plan on using my HELC to offer cash for the prop, then try to resell at a low price ( don't be greedy - right), if I can't sell, I will rehab, then rent it out. I really don't want to rehab or rent, but don't have a buyer's list yet.

Thanks again,Inge


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