Fannie Loosens Guidelines for Investors

Fannie Mae will soon allow investors with good credit to buy more properties.  Since September, Fannie has not been willing to buy purchases mortgages made to investors who already have at least four single-family properties.  That decision, made at the peak of the credit freeze, was one more nail in the demand for housing.

Beginning March 1st, though, Fannie intends to loosen the rules.  Announcement 9-02 Multiple Mortgages to the Same Borrower explains the rules in full, for use with Desktop Underwriter.  Now, investors can own up to 10 properties and still meet the guidelines for Fannie Mae to acquire the loans.  The rules for the additional (5th through 10th) property mean that only investors with good credit and plenty of cash will qualify:

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

The second and fourth rules will probably put off a lot of investors.  Plenty of real estate people are in the market only because leveraging allows them to achieve some high gains.

It remains to be said, though, if this change will be extended for investors working as LLCs.