Multiple Mortgages to the Same Borrower
Fannie Mae is committed to providing financing opportunities for high-credit quality, bona fide
investors. Experienced investors play a key role in the housing recovery and Fannie Mae's
continued support for investor borrowers is consistent with its mission to provide stability,
liquidity, and affordability to the nation's housing system.
Fannie Mae is updating the policy that pertains to multiple mortgages to the same borrower.
Fannie Mae's current policy limits the number of one- to four-unit financed properties in which the
borrower may have an individual or joint ownership interest to four financed properties when the
mortgage being delivered to Fannie Mae is secured by an investment property or second home.
The limitation on the number of mortgages currently being financed applies to the total number
of properties financed, not just the number of mortgages sold to Fannie Mae. Fannie Mae is
modifying this policy to allow investor and second home borrowers to own five to ten financed
properties if they meet certain eligibility and underwriting and delivery requirements as outlined
in this Announcement. Unless otherwise stated, these requirements apply to all mortgage loans
whether underwritten manually.
Underwriting and Delivery Requirements
The borrower cannot have any history of bankruptcy or foreclosure within the past seven
years.
The borrower cannot have any delinquencies (30-day or greater) within the past 12 months
on any mortgage loans.
Rental income on the subject investment property must be fully documented according to the
Selling Guide
the borrower must be supported by two years' federal income tax returns. DU messages
permitting reduced rental income documentation must be disregarded and full documentation
must be obtained.
The borrower must complete and sign Form 4506 Request for Copy of Tax Return or 4506-T
Request for Transcript of Tax Return
federal income tax returns directly from the IRS. The lender must obtain the IRS copies of
the returns or the transcript and validate the accuracy of the tax returns provided by the
borrower prior to the loan closing.
The borrower must have reserves for the subject property and for other properties currently
owned by the borrower (i.e., other financed second home and investment properties) in
accordance with the following section - "Reserve Requirements for Second Homes,
Investment Properties, and Multiple Financed Properties."
Lenders must use Special Feature Code 150 when delivering mortgage loans secured by
second home and investment properties that meet the five to ten financed property
requirements.
Reserve Requirements for Investment Properties and Second Homes
Selling Guide,
Requirements for One-Unit Investment Properties
Currently, Fannie Mae requires at least six months' reserves for all mortgage loans secured by an
investment property that are manually underwritten and delivered to Fannie Mae. There is a
lower reserve requirement applied (two months) for one-unit properties that are underwritten
through DU. Fannie Mae is updating this policy to require six months' reserves for all one- to
four-unit investment property transactions underwritten through DU.Reserve Requirements for Second Homes, Investment Properties, and
Multiple Financed Properties
Fannie Mae is implementing new reserve requirements that apply to all second home
transactions and to investor and second home borrowers that own or have an interest in multiple
financed properties. The amount of required reserves varies depending on whether the subject
property is a second home or investment property, and on the number of other financed
properties the borrower currently owns. The reserve requirements are as follows:
When the borrower will own one to four financed properties (including the subject
property) the reserve requirements are:
two months of reserves on the subject property if it is a second home,
six months of reserves on the subject property if it is an investment property, and
two months of reserves on each other financed second home or investment property.
When the borrower will own five to ten financed properties (including the subject
property) the reserve requirements are:
two months of reserves on the subject property if it is a second home,
six months of reserves on the subject property if it is an investment property, and
six months of reserves on each other financed second home or investment property.
Comments(0)