If you read what’s being said on the many forums and posting boards online about the housing market, you hear a lot of different things about real estate investors.
Some say investors over-speculated in certains market, causing declines and foreclosures. Others say investors are an important part of the solution, since they have the expertise and stomach to purchase and rehab distressed bank-owned inventory that is otherwise passed by.
In response to the first line of thinking, Fannie Mae slapped a four-property restriction on investors in December that caused outrage in the investor market. Thinking that too much investing was a bad thing, regulators said that Fannie would not purchase any loans made to investors with more than four homes in their portfolio.
This week, Fannie reversed itself, sort of.
At the urging of NAR, investor groups and even local community activists, Fannie Mae revised its policy last week which opens the doors for investors to own up to 10 properties, but with stricter qualifying guidelines after the fourth property.
Now, for homes five through 10, borrowers must have a credit score of at least 720. The maximum loan-to-value ratio is 70% or 75%, depending on specified criteria. Borrowers may not have any history of bankruptcy or foreclosure in the past 7 years, or any mortgage delinquencies of 30 days or greater within the past 12 months. Reserve and other requirements also apply.
It’s a good “middle ground” step to get investors back into market while ensuring there isn’t excessive speculation.The recovery taking place in our market is demand driven, and that demand will be further fueled in coming months by discounted prices, tax incentives and a committed “buy-in” from the investor community.
Fannie did the right thing in welcoming investors back into the fold.
Some say investors over-speculated in certains market, causing declines and foreclosures. Others say investors are an important part of the solution, since they have the expertise and stomach to purchase and rehab distressed bank-owned inventory that is otherwise passed by.
In response to the first line of thinking, Fannie Mae slapped a four-property restriction on investors in December that caused outrage in the investor market. Thinking that too much investing was a bad thing, regulators said that Fannie would not purchase any loans made to investors with more than four homes in their portfolio.
This week, Fannie reversed itself, sort of.
At the urging of NAR, investor groups and even local community activists, Fannie Mae revised its policy last week which opens the doors for investors to own up to 10 properties, but with stricter qualifying guidelines after the fourth property.
Now, for homes five through 10, borrowers must have a credit score of at least 720. The maximum loan-to-value ratio is 70% or 75%, depending on specified criteria. Borrowers may not have any history of bankruptcy or foreclosure in the past 7 years, or any mortgage delinquencies of 30 days or greater within the past 12 months. Reserve and other requirements also apply.
It’s a good “middle ground” step to get investors back into market while ensuring there isn’t excessive speculation.The recovery taking place in our market is demand driven, and that demand will be further fueled in coming months by discounted prices, tax incentives and a committed “buy-in” from the investor community.
Fannie did the right thing in welcoming investors back into the fold.
