Financing in 95014>Question Details

Mountain Rain, Home Owner in 95014

How does New Freddie Mac Policy Affect Investors?

Asked by Mountain Rain, 95014 Fri May 23, 2008

http://www.freddiemac.com/sell/guide/bulletins/pdf/bll042208.pdf

According to the above article, Freddie Mac changed the lending guidelines and will not allow funding of more than four investment properties to any one person. How will that affect existing investors? Say, I have 6 investment properties and all of them have mortgages. I'll only be affected the next time I refinance, right?

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These new restrictions are harsher versions of policies that have been in place with many lenders for years. The typical maximum number of mortgaged properties was formerly 10 with many national lenders. Some lenders allow a borrower to have an unlimited number of total mortgages, but cap the number that they will make to a single borrower.
I have a client who owned 45 investment properties with 29 mortgages and 3 home equity lines of credit when I helped him buy a rental property in Hawaii last year. The lender we arranged the loan with did so because the borrower had less than 5 existing loans with that lender.
If you are an investor who buys high end homes with jumbo loans and 5+ unit properties, you are probably not going to be drastically effected by the new Freddie Mac policy. If you are buying smaller single family homes and condos, you may find yourself borrowing more from portfolio and private lenders in the future.
John Souerbry
John A. Souerbry & Associates
Serving Investors and Estates
john@jsrealproperty.com
1 vote Thank Flag Link Fri May 23, 2008
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