Freddie Mac Just Made Getting Investment Loans Harder

I just received this email from a very reliable lender that I like to work with (Tom Brassfield of Security Savings Bank). 

Chris, the following is an announcement about Freddie changing maximum number of mortgages from 10 to 4.

Ah, folks, this is not good news for many of you.  Why?  Because it just made getting a conforming loan nearly impossible if you already own four rental properties here in Kansas City and elsewhere.  Me no like.  

And where Freddie goes Fannie is sure to follow.  This seems to follow up on the trend of punishing proven real estate investors for the problems real estate speculators and careless mortgage companies made.  It’s like when the NCAA punishes a current team and coaches for the transgressions of the previous coach and team.  The statement is made…just to the  wrong people.

Tom, also mention that PMI is getting harder and harder to get for the real estate investor.  Oy.   

4 Comments

Filed under Misc. Real Estate, Real Estate Investing

4 responses to “Freddie Mac Just Made Getting Investment Loans Harder

  1. Another Investor

    I heard this about two weeks ago, and the rule was supposedly applicable to both Fannie and Freddie. It was supposed to be effective May 1st. The pricing also went up for investment loans that are conforming. About the only option left is a portfolio lender.

    This means a lot of small investors will be pushed out of the market and there will be a smaller buyer pool, especially for the foreclosures that need an investor buyer. On the flip side, this will mean more inventory and lower prices for the cash buyers.

  2. The really silly thing is I wonder how many full-doc non-owner occ loans actually defeaulted? I’ll bet the ratio isn’t that high. I don’t know. It’s just a guess.

  3. This too shall pass. It’s so easy to forget that lenders want to lend, and this will seriously cramp their style. Also, Wall Street doesn’t wanna hear any of this kinda stuff. Before you know it, the loosening will begin.

    I give it 1-3 months. There’s simply nothing imprudent about an investor putting down 20% on a property which would break even with 10% — and the lenders will be drooling to make more of those loans. The pendulum on these things tends to swing more quickly than we think.

    Time’ll tell.

  4. I was told August 1. Plus 90% of my business these days is guys buying foreclosures doing rehabs and refinancing out of them to get their downpayments back ($0 down essentially).

    Freddie Mac is now also going to require you to season the loan 6 months. No more buy, rehab and refinance in 4-6 weeks.

    Definitely not good with either change (as I own 15 properties and do rehabs).

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