Fannie Mae announce new guidelines for those homeowners who own more the 4 financed properties or would like to buy additional rental properties.
In Announcement 09-02 Fannie Mae stated, “(We) are committed to providing financing opportunities for high-credit quality, bona fide investors. Experienced investors play a key role in the housing recovery and Fannie Mae’s continued support for investor borrowers is consistent with its mission to provide stability, liquidity, and affordability to the nation’s housing system. Fannie Mae is modifying out current policy to allow investor and second home borrowers to own five to ten financed properties if they meet certain eligibility and underwriting and delivery requirements.”
Please be aware, that many lenders have not yet made the announcement as to when they will begin to purchase these loans. This coupled with the possibility of additional tax credits to all home buyers in the Senate version of the Stimulus bill, however could mean big news to the real estate market.
Eligibility Requirements
Eligibility Requirements: If Borrower owns Five to Ten Financed Properties
If the Property is a Second Home or Investment Property 1-Unit
Purchase Max LTV/CLTV 75/75% Minimum Credit Score 720
Limited Cash-Out Refinance Max LTV/CLTV 70/70% Minimum Credit Score 720
Investment Property 2-4 Unit
Purchase and Limited Cash-Out Refinance Max LTV/CLTV 70/70% Minimum Credit Score 720
Underwriting and Delivery Requirements
● The borrower cannot have any history of bankruptcy or foreclosure within the past seven years.
● The borrower cannot have any delinquencies (30-day or greater) within the past 12 months on any mortgage loans.
● Rental income on the subject investment property must be fully documented according to the Fannie Mae Guidelines: Rental Income.
Rental income from other properties owned by the borrower must be supported by two years’ federal income tax returns. Any streamlined documentation requirements must be disregarded and full documentation MUST be obtained.
● The borrower must complete and sign Form 4506 Request for Copy of Tax Return or 4506-T Request for Transcript of Tax Return granting the lender permission to request copies of federal income tax returns directly from the IRS. The lender must obtain the IRS copies of the returns or the transcript and validate the accuracy of the tax returns provided by the borrower prior to the loan closing.
● The borrower must have reserves for the subject property and for other properties currently owned by the borrower (i.e., other financed second home and investment properties) in accordance with the guidelines discussed below
● DU Refi Plus loans are exempt from the new requirements.
New Reserve Requirements
Fannie Mae is implementing new reserve requirements that apply to all second home transactions and to investor and second home borrowers that own or have an interest in multiple financed properties. The amount of required reserves varies depending on whether the subject property is a second home or investment property, and on the number of other financed properties the borrower currently owns.
The reserve requirements are as follows:
When the borrower will own one to four financed properties (including the subject property) the reserve requirements are as follows:
● 2 months of reserves on the subject property if it is a second home
● 6 months of reserves on the subject property if it is an investment property, and 2 months of reserves on each other financed second home or investment property.
When the borrower will own five to ten financed properties (including the subject property) the reserve requirements are as follows:
● 2 months of reserves on the subject property if it is a second home
● 6 months of reserves on the subject property if it is an investment property, and 6 months of reserves on each other financed second home or investment property.
Moving Forward,
Kendall E. Matthews
P.s. Want a great tax lien list resource? Visit Arizona Tax Liens and get a Free delinquent property tax list for Greenlee County, other counties, like Maricopa cost between $49 to $29.
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