Effective March 1st, Fannie Mae will finance an investor’s acquisition of up to ten single family residence (SFR) properties. The previous limit on concurrent investor loans was four. Additionally, the loan-to-value (LTV) ratio on qualified investor purchases financed by Fannie Mae has been increased to 75% for single unit investments and 70% for two-to-four unit investments.
Investors who own five to nine properties who apply for another loan through Fannie Mae must have six months worth of cash reserves for each investment property.
first tuesday take: Investors will be a natural source of buyers to absorb the SFRs and help stabilize the real estate market – and produce escrow closings and a paydays for brokers and their agents. Prices throughout California will drop further during 2009-2010, due principally to excess unoccupied or soon-to-be-vacated SFRs which are or will be placed on the market, and the fundamentals of income property investments will soon suggest that lowered prices make sense for investment purposes, creating the ideal environment for the SFR investor. It’s a grand idea and the policy of financing investors in SFR with up to ten homes should be retained after this recession, but one that lenders must couple with a high creditworthiness requirement since default rates for owners who are investors typically is too high for FHA and Fannie Mae to sustain over the long term. Approximately 45% of California households do rent.
Re: “Investor Report: Four Unit Limit,” from Homes101.com
