Fannie Mae to Expand Mortgage Rules

In the past, if a real estate investor owned four properties, that individual would be barred from Fannie loan qualification. No longer. The company will now expand the limit on second home and investor loans to as many as ten properties per borrower. This notice was posted on Fannie's website on February 7th.

The purpose of this is to spur housing demand of course. The hope is that investors bringing significant equity into the equation will help the market recover. Both Fannie and Freddie have loosened a number of rules and set policies to rework delinquent debt. They hope this will lower their foreclosure costs. There has also been a tightening of some guidlines and a boosting of certain fees in the case of higher risk loans.

The expanded rules we are seeing in Fannie and Freddie are intended to facilitate borrowing on the part of those with good financial reserves and of course, a strong credit history. Other announcements in the past couple of weeks include Freddie telling lenders it will match a .75% point fee for condo mortgages and other charges which were previously announced by Fannie. Also, Fannie said it would loosen refinance rules for borrowers if the company already owned their default risks.

In the Feb. 6th announcement, Fannie said real estate investors would be required to have more liquid assets at this point in order to qualify for loans. In the past, some one-unit property buyers only needed two months worth of mortgage and other home payments in reserve. In the future, they will need six months worth of such payments in reserve. This applies to investors with 5-10 properties.

For your Maui real estate questions, you can call (800) 367-5632 or email us at info@whalersrealty.com. This week, we recommend a look at the Kaanapali Golf Estates and the Whaler on Kaanapali Beach. Mahalo for reading and we'll see you next week!