New Rules (Or Should We Say Old, Modified Rules…)

Friday, Fannie Mae rolled-back one of its least popular mortgage guidelines updates of the last year.

Starting March 1, 2009, real estate investors can once again own and finance up to 10 individual properties.  Before that warm-fuzzy feeling takes over, there is a catch.

The Additions to the Old Rules

Homeowners buying a 5th, 6th, 7th, 8th, 9th or 10th home must meet the following standards, as set by Fannie Mae:

1. 720 credit score
2. 25% downpayment for a 1-unit (for 2-4 units you must have 30%)
3. No mortgage delinquencies in the last 12 months
4. 6 months of reserves for each investment property

Making Credit Available to Those Who Should Have It

In other words, Fannie Mae is re-opening the lending spigot for real estate investors with good credit, a sizable downpayment and ample reserves.

According to Fannie Mae, the change rational behind the move is that (and I quote) “Investors can play a key role in the housing recovery”.  Until now, foreclosure auctions have gone at a turtles pace because investors that are cash poor have been unable to secure financing because of Fannie Mae’s four property limit.

I’d expect more investors to jump back into the market and soaking up some of the foreclosures in the market after this rule kicks in.

Don’t Forget About Existing Properties Too!

Some homeowners got caught in this fiasco and couldn’t refinance their property because of the new number of property rules that Fannie Mae had in place.

Good news, now the refi-boom helps you too!

And lastly, not to be forgotten, homeowners with more than 4 properties can finally participate in the ongoing conforming mortgage Refi Boom. Until now, they’ve been stymied by the 4-property restriction, too.

Tagged as: Fannie Mae, investment property, Mortgages, multi family, property limit