end of ALT-A

Fannie Mae has announced they will no longer purchase ALT-A paper from lenders beginning January 1st, 2009.  No surprise there as the few companies that still lend that kind of money have severly scaled back the LTV limits and Credit requirements.  Probably was a no brainer from Fannie MAE and I am surprised it hasn't happened sooner.  The big losers will be anyone trying to buy investment properties.  Currently the highest LTV with convention is 85% and that could be dropping down to 80% in the near future due to PMI restrictions.  These loans also require large reserve amount, anywhere from 6 motnhs PITI to 12 months PITI for all financed properties.  The small time or new investors will stuggle to come up with financing for these types of loans.