Fannie Mae was a semi-independent company that carried out its last act as such several weeks ago. This year Fannie Mae has carried out 22 updates.
The new guidelines first set a limit on the number of properties that can be owned by one person. Formerly, one person could own 10 properties. Now, mortgage requests for a loan for second homes or investment properties will be denied if the mortgagee already finances more than a total of 4 properties.
There is a loophole, however. Fannie Mae will not count properties against the 4-property limit if they are held in the name of a corporation. This holds even if the real estate investor is the sole owner of said corporation.
Investors, therefore, should consider moving their properties into a corporate structure to avoid triggering Fannie Mae’s 4-property limit. Investors often take this step for liability and taxation reasons, but it’s now a good idea for mortgage approval reasons, too.
When considering the second part of the guidelines, there is no comparable “out.” New loan-to-value fees will be assessed for investment property loans.
*3.75% loan fee – Loan-to-value 80.01-90.00% *3.00% loan fee – Loan-to-value 75.01-80.00% *1.75% loan fee – Loan -to-value less than 75%
These fees, along with other risk fees assessed by Fannie Mae are mandated to be paid by the buyer. The other risk fees are a minimum of % for investors.
The government hasn’t released any information about possible relaxation of mortgage guidelines since their Fannie Mae/Freddie Mac takeover. If the guidelines loosen up, this would be helpful for real estate investors. If those who want to mortgage property can’t qualify for a loan, lower rates aren’t going to be a lot of help.
Consider incorporating your properties. Also, if you are considering trying to mortgage one or more investment properties, it may smart and and more cost effective for you to buy over the near term
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