Fannie Mae Raises Loan Limits for Investors!

During the latter part of last year, Fannie Mae put a limit as to how many mortgage loans you were able to have. That limit was set to four loans, meaning that if you already had four mortgage loans and wanted a 5th to buy another investment property, you were out of luck.

One of the reasons Fannie Mae put this limit was to prevent investors from over-extending themselves like many did over the past few years since it was easy of them to simply walk away from their investment properties. This caused many banks to lose an obscene amount of money and one of the reasons they have tightened credit during the past few months.

This created a huge problem for many investors wanting to take advantage of current low rates and low prices to increase their real estate portfolio. Therefore, many had to find other sources for financing, including using their own money or using hard-money lenders.

Now they realized that many investors are starting to buy properties again, this time at bargain prices. Then you add all-time low rates and they've got themselves tremendous purchasing power.

In an effort to loosen credit again and stimulate the economy, the National Association of Realtors (NAR) lobbied and urged Fannie Mae to raise those limits. And they have! As of March 1, 2009, the limit has been raised to 10 loans. The restriction applies to the total number of loans, not just to the loans sold to Fannie Mae.

However, as expected they did set up stricter requirements to qualify. Here are a few:
*FICO Credit Score of 720+
*High Reserve Requirements (vary per block of units owned)
*75% LTV (Loan to Value Ratio) or 25% down
*No history of bankruptcy or foreclosure within the last 7 years
*If investor is already over the 4 properties, refi LTV is 70%
*No delinquencies by the borrower on any loan within the past 12 months

This is definitely a step in the right direction and a sign that financials institutions are starting to loan money again!!!

How will this affect you?
With interest rates and home prices being as low as they are, many investors are now going to be able to buy more properties, which might include homes in your neighborhood. That's good news because the longer a foreclosed home (or any home for that matter) sits on the market for sale, the more it drags your home value down. This will make properties more liquid and hopefully stabilize home values.

On a personal note, my Alma Mater, CSUN has made it into the NCAA Basketball Tournament. Go Madators!


Manny Carrillo
REALTOR®
SJ Fowler / GMAC Real Estate
4015 S. McClintock Dr., Ste. 110
Tempe, AZ 85282
480.338.3062 - Direct
www.mannycarrillo.com
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