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Fannie Mae recently released an update regarding the maximum amount of financed properties allowed.

Looks like Fannie Mae has followed Freddie Mac's lead on this rule. As of December 1, 2008, Fannie Mae is making changes that will affect many investors. The new rule limits borrowers who are purchasing a new rental property or second home to a maximum of 4 financed properties.

This is a big deal and will affect many of our clients!

Currently Fannie Mae limited borrowers to no more than ten financed properties (1-4 units) in accordance with their Selling Guide. So this is quite a shift in their guidelines.

So what should Investors do now?

It will become more important that you create a high level strategy with your mortgage professional.  In a market like this where there are deals everywhere, the last thing you want is to have big shifts in your financing options. Plan to pay more in interest rate because you will now need to locate non-conforming loans and prepare yourself for more down payment. As you know, investing is all about the numbers, so a higher monthly payment and more money into the deal with affect your bottom line!

My frustration!

I get that Fannie Mae is loosing their shorts and they need to become more conservative to help them to be more profitable... BUT... why make such a blanket rule.

Just because someone is buying their 5th property does not mean that they will default.  Why not decrease the debt-to-income limitation for these type of borrowers and give those who have the reserves and the means the opportunity to continue to pick up more deals.

Warning: Many lenders are already changing their guidelines and this new rule is already in effect.  More lenders will continue to do the same. Expect those non-conforming lenders who service the owners with more than 10 properties to make shift in their programs as well.

We will keep you updated on this ever changing lending world we are in!  Don't let all this get you down! A good mortgage professional can assist you in obtaining financing in any market.  You may need to sharpen your pencil again and make sure the numbers on your next investment purchase make sense with the new rules (if they apply to you).

Please note: When a conforming mortgage loan is secured by the borrower's principal residence, there is no limitation on the number of one-to-four unit financed properties in which the borrower may have an individual or joint ownership interest. but even though this is a Fannie Maw rule, expect the individual lenders to add additional underwriting guidelines that supersede this guideline.

This blog is written by:
Team Newington
Sacramento Mortgage Planners
(916) 687-6868
www.SuperiorLoanTeam.com