by Michael Mergell, Managing Broker RE/MAX Ability Plus-Fishers
I have been given some VERY good news that just can't wait till Monday
Here are some some-what detailed and tentative guidelines for Fannie Mae's return to a 10 financed property limit. I was tipped off early this week that Fannie was going to make this move, but I had seen nothing yet from within Countrywide. I did find that Fannie Mae is indeed working on rolling this out. This is tentative, but I like to try to be on the leading edge of things as much as I can be...
1. The projected date for the first loans eligible for purchase by Fannie Mae looks to be March 1st, though we & other lenders may not be working in "real time" with that date. These things can be complicated.
2. There are serious strings attached when you get to the 5 - 10 range of financed properties. If the property being purchased (or refinanced) is for investment there will be limited loan-to-values, credit score requirements, and some SERIOUS reserve requires. Reserves are liquid funds verified that are looked at as the number of months those dollars would translate into making mortgage payments on the properties owned by the borrower. It looks like they would need to document assets to cover about six months of payment on essentially all their mortgages, not just on the subject property.
3. I do not see ANY allowance for Cash-out refinances in these guidelines, so don't expect to be cashing out homes under these limits. That includes getting a home paid for with cash to make the purchase happen quickly & expecting to get your cash back with a mortgage after the fact...not going to happen.
4. For single unit homes, it looks like the LTV max is 75%. It appears to be 70% for 2-4 unit homes. Both require a minimum 720 credit score.
5. Other notes: NO bankruptcy or foreclosure for 7 years. NO mortgage late payments (30 days or greater) in the last 12-months. Everything fully documented, regardless of what the automated underwriting says...treat it like a manual underwrite with MAXIMUM documentation.
In other words, yes, Fannie Mae is planning to go back to the 10 financed properties limit, but you had better get your borrower prepared for a ride, and they had better bring their "A game". Investors better be ready to jump through hoops on this one and be prepared for probable price adjustments.
None the less, 10 is better than 4. Sell On!!!
MICHAEL MERGELL (317) 645-8717 MICHAELMERGELL@REMAX.NET
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