Early this month, mortgage finance company Fannie Mae, stated that they will loosen guidelines and allow investors to finance a maximum of 10 loans. When the financial crisis in September happened, they went from allowing 10 loans for any individual down to four. Due to increasing demands for policy reviews, Fannie decided to reinstate the original guideline.
Since their September takeovers, Fannie and competitor Freddie Mac have loosened some underwriting rules and set policies for their loan servicers to rework more delinquent debt to aid the slumping housing market and lower their foreclosure costs. The companies, which own or guarantee almost half of the $12 trillion of U.S. residential debt, also have tightened guidelines and boosted fees for some loans to reflect their higher risks.
There are some restrictions with the new policy reinstatement. First, borrowers must have a strong credit history, and up to six months reserves in the bank. Investors with five to 10 properties will need six months of reserves for their other properties, compared with two months for borrowers with fewer homes, according to the notice. Fannie also changed its definition of the payments to include homeowner association dues, cooperative fees and other loans secured by the properties, along with the first mortgages, taxes and insurance. There will also be higher fees with these loans, and rates above normal.
All in all, despite the new changes, it's refreshing to have the ability to have more than four mortgages. The change will definitely help the housing markets all across the country, and allow the investors and homeowners the ability to buy up some of the surplus homes available for sale. For more info on this topic or any other, visit my site at JoshSellsVirginia.