I currently have 4 mortgages - 3 rentals and my primary residence. Since I am unable to obtain convention

Asked by Brenda, Palmdale, CA Sun Feb 22, 2009

financing due to the new 4 max rule from 'FreddieMac, I am currently looking for a lender to make a portfolio loan for a single family residence that I would like to purchase in the Palmdale are to use as a rental. Does anyone have any banks they can recommend for these types of loans?

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Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Sun Feb 22, 2009
Lending answer:

You are in luck. Beginning March 1, 2009, Fannie Mae will once again purchase loans from lenders for borrowers who have up to 10 financed properties.

Last June, Fannie Mae and Freddie Mac limited the total number of financed properties for loans delivered to Fannie or Freddie to just 4 per borrower, unless loan #5 was for a primary residence.

There are several minimum requirements, summarized below

Minimum middle credit score is 720.
30% down payment
6 months reserve requirements for ALL second home and investment financed properties, including the property you intend to purchase
No 30 day lates (or worse) on any mortgage in the past 12 months
No bankruptcy in the past 7 years

Reserve requirements means you must prove liquid reserves for mortgage principal, mortgage interest, property taxes, home owner's insurance, and association fees (if applicable). This is in addition to proving cash for down payment, closing costs, and any other reserves required by the lender. Reserves may be proven from cash savings, 401(k) plans (using 60% of vested balance), or from stock/investment portfolios.

Bear in mind that net rental income from your investment propreties will be a critical factor in determining your eligibility for a loan underwritten to Fannie Mae guidelines.

Only 75% of your net rental income may be used for qualifying purposes. Rental income must be supported by signed leases as well as proof of receipt of rent (such as bank statements showing deposits of rent).

Qualifying rental income will be determined from your net rental income from Schedule E of your tax return. Depreciation may be "added back" to your deductions for calculating taxable income from rent... but if Schedule E shows a profit on rent costs of less than 25% of your gross rents, you will need other sources of income to make up the difference for qualifying income.

Shopping around for lenders willing to underwirte loans under Fannie Mae's Lender Announcement 09-02 will be required. Many lenders will likely be unwilling to write the loan even if you meet all of Fannie's eligibility requirements. You will also likely be charged additional fees/higher interest rate for investment property loans beyond your first 4.

When calling prospective lenders, all that is needed is to ask if they will write loans under Fannie's Lender Announcement 09-02.

I also strongly advise you to see a full Pre-Approval (ie, submitting all of your documentation to an underwriter for a credit decision) prior to making an offer on a property to be sure the lender will approve the purchase.

Do not rely on "Pre-Qualifications" issued based on a review of your credit report and verbal informtion supplied by you. Loan originators have no authority to issue a credit decision... which is why "Pre-Qualfications" are educated guesses at best and utterly worthless at worst.

Here is the link to Fannie's Lender Announcement 09-02:
2 votes
Jaspal Chhac…, , New York
Mon Feb 23, 2009
Hello Brenda

On Feb 6th Fannie Mae rolled-backed its mortgage guideline restricting the maximum financed homes to 4 in the case non-owner occupied properties. Effective March 1, 2009, real estate investors can once again own and finance up to 10 individual properties with restrictions as detailed on my blog post at http://www.mortgagebloke.com

Do speak with your loan officer/mortgage consultant regarding the roll out of this guideline update with regard to individual mortgage lenders / investors that he / she may be working with.

In case of any questions and/or concerns, please feel free to contact me.

Jaspal Chhachhi
Sr. Mortgage Consultant
East Coast Capital Corp.

T: (646) 657-1858
F: (212) 202-6165
E: jchhachhi@eastcoastcap.com
Web Reference:  http://www.mortgagebloke.com
1 vote
M.D.J, , Los Angeles, CA
Sun Feb 22, 2009

No need for a portfolio lender, Fannie Mae will allow up to 10 properties financed starting next month with a 720 credit score and on a single family investment purchase you would need 25% down so, feel free to contact me for any further questions or info. and lending needs.

Good luck to you....
1 vote
Johnny James, Agent, Beverly Hills, CA
Wed Nov 11, 2009
You can obtain conventional financing
0 votes
Cindi Wolf,…, , Lancaster, CA
Sun Mar 1, 2009

I will be more than happy to check on that for you! There are some portfolio lenders that I have done business with in the past and can get information for you.

You can call or email me with your contact information at cindiwolf@msn.com.

Thank ou,

Cindi Wolf
Troth Realtors
Web Reference:  http://www.cindiwolf.com
0 votes
Tamara Stoebe, Agent, Lancaster, CA
Sun Feb 22, 2009
Hello Brenda,

You've received a great answer below regarding the change in the lending requirements. As you are looking for property in Palmdale, CA, I'm a buyer's agent specializing in the Antelope Valley. Now is an excellent time to purchase investment property.

If you do not currently have a buyer's agent, I would love to assist you in your search. Please contact me and I can open our local multiple listing service list of available properties to you.

Tamara Stoebe, REALTOR, QSC, e-PRO
1801 W. Ave. K
Lancaster, CA 93534
Cell: (661) 466-6849
Fax: (661) 422-3006
E-mail: Tamara@TamaraStoebe.com
Website: http://www.TamaraStoebe.com
0 votes
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