Skip to main content

Good News for Real Estate Investors

While I may have my doubts about the proposed home buyer tax credit, I have no such doubt about Fannie Mae's latest pronouncement.

On Friday, Fannie Mae announced that it is removing the "four property" cap it imposed on real estate investors last year and will now fund loans to "high-credit quality, bona fide investors" for the purchase of up to ten investment properties.

The loan guidelines are reported as:

  • 720 minimum credit score
  • 75% maximum loan to value for purchases
  • 70% maximum loan to value for refi's, including "cash-outs," to the limit (ok, that assumes that you have that still much equity left in the property)
  • Starting March 1, 2009
Ok, truth be told, the four building restriction was only announced last fall and went into effect in December, so it was only a thorn in our sides for what, five weeks? But it most certainly was a thorn in the side of many investors. Why did the government stick it? Lenders needed to try to stem the tide of defaults on investment loans. For Fannie Mae, this was a classic case of closing the barn door after the cows had gotten out. By that point, there were simply too many unwise loans given to too many speculative investors buying condominiums to flip or to developers converting three-flats or other buildings into condominiums for those speculators. Those loans have been most vulnerable to defaults, distressed owners & foreclosures.

But kick starting the real estate markets take a higher priority right now. Investors and going to lead the way. A different type of speculation, perhaps, but this time the tighter screening of borrowers should filter out riskier loans.

This is great news for anyone who was capped by the "old" limit.

This is equally good news for anyone who has been sitting on the sidelines waiting to buy an investment property or two.

It seems to to me that there is a vast inventory of REO (bank owned) properties on market, or coming soon. Prices have certainly dropped. Interest rates are still very attractive. There is a certain "dis-satisfaction" with stock market returns now.

Is now the time to take on a (another) rental property?

Comments

Popular posts from this blog

The Equifax data breach and you — 6 steps to take now

Identity thieves hit a major credit reporting agency—hard. Millions of consumers’ confidential identity information has been compromised.

Equifax, one of the big three credit reporting agencies announced that a massive security breach took place earlier this year. Offenders accessed data sets of 143 million US consumers.

What to do when drones fly near your home

Imagine a quiet evening on the deck of your new home when—out of nowhere—a noisy drone begins hovering around your property, almost certainly snapping photos or video. It’s like Space Invaders meets Gladys Kravitz. So what do you do?

Help! My Neighbor’s Old Tree is Growing Over my Roof

Let’s say about 100 years ago, a family planted an oak tree on the edge of their property. Over generations it’s grown into a magnificent tree that provides summer shade, autumn color and a swing for the neighborhood kids. You probably even liked the tree when you bought the house next door to it.

But today, its root system is invading your basement, its acorns bombard your yard and its huge limbs loom threateningly over your roof. By law, can you cut it down? Trim it? Turn it into a boat?