Here are a couple of important guideline changes that have come out in the last week or so. Though Fannie / Freddie / HUD have approved these changes, the banks have not yet implemented them . So, if have a client who plans on taking advantage of these changes they need a longer escrow period to allow the Banks make them available. I would suggest 60 Day escrows to be safe... Please let me know if you have any questions.
FHA Loan Limits: The American Recovery and Reinvestment Act (ARRA), which was signed into law on Tuesday, increased the maximum conforming loan limit for mortgages originated in 2009. The increase affects 250 counties across the United States. For these areas, identified in the attached table, Fannie Mae and Freddie Mac loan limits will return to their late-2008 levels. Please see the attached pdf. file. As you will see the new level for Riverside county will be $500,000. # of Properties financed limit:
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 or through Desktop Underwriter® (DU®).
Eligibility Requirements
| Eligibility Requirements: Five to Ten Financed Properties | |||
| Transaction Type | Number of Units | Maximum LTV/CLTV/HCLTV |
Minimum Credit Score |
| Second Home or Investment Property | |||
| Purchase | 1 Unit | 75/75/75% | 720 |
| Limited Cash-Out Refinance | 1 Unit | 70/70/70% | 720 |
| Investment Property | |||
| Purchase and Limited Cash-Out Refinance | 2-4 Unit | 70/70/70% | 720 |
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. Rental Income. Rental income from other properties owned by the borrower must be supported by two years' federal income tax returns. |
| • |
The borrower must complete and sign Form 4506 Request for Copy of Tax Return or 4506-T Request for Transcript of Tax Return granting the lender permission to request copies of 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." |
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