It seems just before the ink dried on my last post about financing for investment properties, an update is required. And this is a very welcome update I’d like to write more often.
As I pointed out previously, long term real estate investors were restricted to a maximum number of 10 conventional mortgages they could have outstanding at one time. So if your investment goals required more properties, you were either up a creek or had to look at alternative less favorable types of financing i.e portfolio loans or lines of credit.
Well, as of today, Fannie Mae has expanded that number up to 20 mortgages provided that the investment property being financed is part of their own portfolio of foreclosures AND you use Homepath financing (from an approved Lender that offers it).. Starting with the 11th mortgage, real estate investors will be required to put down 30% of the purchase price, up from 25%. That should be a non issue since real estate investors have long been willing to commit more capital if they were allowed to finance more properties as the BiggerPockets/Memphis Invest survey showed last week. No indication yet of the interest rate premiums that will be charged on these loans although I would think there will certainly be some premium.
There are certainly some strong limitations to this policy change. Investors who purchase new construction or non Fannie foreclosures would not be able to utilize it and would still be restricted to 10 mortgages. This comes across as a move to clear Fannie Mae’s pipeline of foreclosures faster. It’s amazing that it took them so long to figure out that well capitalized investors are a common sense solution to clear up the glut of foreclosures. But I digress.
The demand for Homepath approved foreclosures is almost guaranteed to spike in response to this change in policy. If you need a list of approved properties in the Houston area or a lender recommendation, call my cell at 713-922-2702 or contact us up top.
Is this change perfect? Not really. But in real estate investor land, today was a good day.