During this year, there have been 22 Fannie Mae updates. Fannie Mae has been a semi-independent company. However, its last act as such occurred several weeks ago.
The new guidelines first set a limit on the number of properties that can be owned by one person. Formerly, one person could own 10 properties. Now, mortgage requests for a loan for second homes or investment properties will be denied if the mortgagee already
finances more than a total of 4 properties.
There is a loophole, however. Fannie Mae will not count properties against the 4-property limit if they are held in the name of a corporation. This holds even if the real estate investor is the sole owner of said corporation.
Therefore, it might prove beneficial for investors to restructure their properties into a corporation and avoid the 4 property limit. Now, this is a good idea to help gain mortgage approval even though some investors have taken this action for tax and liability reasons.
The second part of the guideline change cannot be so easily avoided. Fannie Mae is assessing new, loan-to-value based loan fees on all investment property mortgages.
Loan-to-value less than 75 percent : 1.75% loan fee
Loan-to-value 75.01-80.00 percent : 3.00% loan fee
Loan-to-value 80.01-90.00 percent : 3.75% loan fee
It is obligatory that these fees be paid along with any other fees incurred from other risk fees assessed by Fannie Mae. These fees currently are % at a minimum for
investors.
Our government hasn’t, since the Fannie Mae/Freddie Mac takeover, indicated whether or not mortgage guidelines will be altered. This would be positive for investors because,
as we know, low mortgage rates won’t help much if those who want to invest in real estate can ‘t qualify for a loan .
If you’re currently in the market for an investment property (or two), consider that it may be cheaper and simpler to purchase over the near-term versus the long-term. And consider moving your existing properties into a corporate structure first.