Fannie Mae: Finance More than Four Properties If You Want

By Miranda Marquit

February 11th, 2009

Posted in Mortgage Lenders, Foreclosures, Economy, Mortgage Trends, Mortgage News, Mortgages

Image by spike55151 via Flickr

In response to the mortgage market meltdown, Fannie Mae added some guidelines that restricted real estate investors from buying (or refinancing) more than four properties. This restriction really put a damper on things for some real estate investors, since Fannie Mae and other government sponsored institutions have been among the few lenders actually willing to make home mortgage loans. Now, though, Fannie Mae is getting rid of the restriction. Arizona Mortgage News reports on the stance reversal:

According to Fannie Mae, the change rationale is that experienced investors can “play a key role in the housing recovery”. Until now, foreclosure auctions have gone at less than full speed because investors unable to pay cash have been halted by the existing 4-property Fannie Mae limit.

Going forward, expect a more expedient foreclosure liquidation nationwide which should, in turn, provide further support for the housing market.

There are still some requirements, however. One can’t simply just get a refinance or buy a 5th (or beyond) property. Here are some of the minimums that must be met to take the mortgage financing beyond four properties:

Credit score of more than 720.
Down payment of 25% for single-unit properties and 30% for properties with two to four units.
Can’t have had a mortgage delinquency in the past year.
Each investment property must have six months of reserves.

Even though these new guidelines may seem steep, the fact of the matter is that care does need to be take with regard to who can get mortgage financing. And those with more properties have a higher risk of defaulting on at least one of them. This rule relaxation should allow real estate investors in good standing to help get things moving again — while at the same time providing some protection against this turning into yet another mess.

Fannie Mae Relaxes Standards For Refinancing [Refinancing] (consumerist.com)
It’s Semi-Official : New Conforming Mortgage Fees Go Into Effect Monday (movephilly.blogspot.com)
To Refinance Or Not To Refinance? (cbsnews.com)

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