Freddie Mac Cuts Maximum Number of Financed Properties

Freddie Mac recently announced guideline changes that will greatly affect residential real estate investors.

Beginning August 1st, 2008 the following changes will go into effect:

A borrower may not have more than four financed 1-4 unit properties, including the subject property.

For cash out refinances the borrower must own the property for at least six months prior to refinancing.

For a complete update on new Freddie Mac guideline changes go to: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll042208.pdf.

What does this mean to the investor?

 

Under current guidelines for Freddie Mac and Fannie Mae an investor is allowed to have up to 10 financed properties. This change will prevent an investor who has more than 4 financed properties from obtaining a mortgage with lenders who sell their loans to Freddie Mac.  
Currently Freddie Mac and Fannie Mae do not have loan seasoning requirements on investment properties.

The second guideline change would affect investors purchasing properties with hard money loans, lines of credit or cash with the intent of refinancing to pull cash out.  Under the new guideline an investor would have to wait 6 months in order to process a cash out refinance.
Fannie Mae and Freddie Mac are for-profit, privately capitalized government-sponsored
enterprises that purchase the majority of conforming loans. Most all conforming lenders now underwrite strictly to Fannie/Freddie guidelines. 

Source: REIN USA