Monday was a great day for me, namely – because I was able to share some good news with a client who was looking to refinance several rental properties here in Winter Haven, Florida but was unable due to Fannie Mae’s previous 4 investment property limit.
This all changed last Friday, however -as Fannie Mae announced that effective March 1, 2009, real estate investors can once again own and finance up to 10 individual properties. The restriction reversal does come with new minimum requirements, however – which may still keep a good number of investors on the sidelines for now.
Homeowners buying a 5th, 6th, 7th, 8th, 9th or 10th home must meet the following standards, as set forth by Fannie Mae:
- 720 credit score
- 25% downpayment for a 1-unit (30% for a 2-4 unit)
- No mortgage delinquencies in the last 12 months
- 6 months of reserves for each investment property
What’s happened here is Fannie Mae realized the need to open up credit a bit for qualified investor borrowers. The thing is, their idea of qualified means real estate investors with good credit, a big downpayment and large cash reserves.
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.
While I applaud the move, I’m hard pressed to believe that there is an abundance of investors out there with 6 months of cash reserves for each property they own. Maybe they’re out there – and if so, I hope this decision helps to spur more mortgage activity. Always a fan of that!
Moving ahead, look for faster absorption of current foreclosures nationwide, which should provide further support for the housing market.
Related article
- Fannie, Freddie to ease mortgage payments? (money.cnn.com)
I hope you found this post useful! As always, if you or anyone you know is in need of a local Florida mortgage broker, I’m your guy. Call me at 863-604-3019 or apply online for your Florida mortgage. We’ll keep you posted and let you know when it’s time to pull the trigger!
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Kevin – that’s great news – thanks for keeping us up-to-date on the latest!
Cyndee Haydon’s last blog post..Clearwater Florida – Have We Just Seens Signs of Clearwater Real Estate Market Recovery?
It is really great news, Cyndee. Any sign that the lending / credit market is loosening up is a good thing!