Stop Home Foreclosure

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 first part of the guideline change limits the number of properties owned by any one person. The former guidelines allowed for 10. Fannie Mae will now decline any mortgage application for a second home or investment property if the mortgage applicant already finances, or will finance, more than 4 properties in total.

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.

Secondly, some of the guidelines do not have such a loophole. All investment property mortgages will be assessed with new loan-to-value based loan fees by Fannie Mae.

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.

Since its Fannie/Freddie takeover, government officials have not addressed whether mortgage guidelines will be rolled back to “a looser time”. If they are, it would be a big deal for real estate investors because, as many are finding out, low rates don’t matter much if you can’t qualify for them.

Consider incorporating your properties. Also, if you are considering trying to mortgage one or more investment properties, it may smart and and more cost effective for you to buy over the near term