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?
Labels:

Comments

Post a Comment

Popular posts from this blog

PLM Title Shuttered

Title insurance is a critically important part of any real estate transaction; or at least it should be. The title company guaranties the "quality" of an owners interest in the property - that there aren't any (unknown) liens or defects. No buyer that I work for will purchase a property without it. Title insurance is only as good as the insurer. We want to know that the insurance company, like the Rock of Gibraltar , will always be there. We want to sleep easy at night, knowing that the client is protected. That said, it was a bit distressing to see that PLM Title Company shut its doors, without any forewarning last week. Worse still, this morning's news is that there is a criminal investigation underway - and that we do not yet know why. Old timers like me shudder with memories of the great Intercounty Title debacle five years ago. Here's to hoping that this one is nothing like that one. Set aside the problems involved trying to make a claim against a defun
6 comments
Read more

FHA Loans and Condo Sales - Is Relief on the Way?

By all outward appearances, state government in Illinois has ground to a complete halt, with all eyes focused on the Governor's "problem" and all the related fal - der -rah. Its hardly business as usual in Springfield, but not everything has ground to a halt. Several new bills have been introduced this week. That is not to say that they will be of benefit to we the people. Nonetheless, the cogs and gears are turning, and we are hoping for the best. One such proposal comes from Rep. LaShawn Ford of Chicago's west side, who is himself a real estate broker and entrepreneur . He is the author of House Bill 155 , introduced & referred to the Rules Committee Wednesday. It seeks to address one of the most common problems I am seeing in condominium resale transactions these days; the tension between many Declarations of Condominium and FHA loan guidelines. Many Condo Declarations provide Associations with a "right of first refusal," which basically allows t
3 comments
Read more

MAYOR DALEY PROPOSES TIF FINANCING FOR SOME DISTRESSED PROPERTIES

Lets see how City Council reacts on this one, but the Mayor introduced a pretty interesting little ordinance that might be a real boon to first time area home buyers willing to buy and rehabilitate some bank-owned properties. Progress Illinois reports that the mayor's bill, introduced on March 9: "seeks to tackle the growing problem of vacant homes that are blighting neighborhoods across Chicago, and in particular in minority communities. Called the Vacant Building TIF Purchase and Rehabilitation Ordinance, the  bill  (PDF) proposes allowing residents with a household income no greater than 100 percent of the regional median income to apply for a tax increment financing (TIF) grant that would pay for up to 25 percent of the cost of purchasing and rehabilitating an empty residential property. Single-family empty homes or units in condo and cooperative buildings with four units or fewer are eligible. The empty homes must be located in a TIF district and must be in need of
Post a Comment
Read more