GSE Changes for Second Home and Invesment Properties

With all of the turmoil surrounding Wall Street and Washington these days, we’ve heard very little about the GSE’s and how they’re doing.

One change which Fannie Mae recently introduced could make a big impact in your life if you are in the market to purchase either a second home or investment property.

Here is a paragraph from the most recent Fannie Mae Guideline update – the glaring change being that the total number of properties allowed when financing either a second home or investment property is moving from 10 currently to 4. This change, while not officially in place until December 1, 2008 is already being enforced by many lenders across the country.

“When a conforming mortgage loan is secured by the borrower’s principal residence, there is no limitation on the number of one-to-four unit financed properties in which the borrower may have an individual or joint ownership interest. If the conforming mortgage will be secured by a second home or investment property, the borrower is currently limited to no more than ten financed properties in accordance with the Selling Guide.
Fannie Mae is updating the guidelines to limit the number of financed properties to four when the mortgage being delivered to Fannie Mae is secured by a second home or investment property.”

Typically these changes aren’t made with much fanfare, so it’s important for you to be working with a Mortgage Banker who is intimately familiar with both Fannie and Freddie guidelines, as this could be a transaction killer for those looking to purchase either second homes or investment properties.

Now with that said, this doesn’t prohibit those who own at least four properties from ever purchasing a fifth or greater number property – it simply means that you will have to find some type of portfolio offering (alternative financing) – or non-agency mortgage program.

Jeremy M. Salemson
CEO
Corporate Investors Mortgage Group, Inc.
www.cimginc.com