Walker’s Wholesale Houses

Source: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0816.pdf

From the August 2008 requirements from fannie mae.

Bankruptcy

Updating the requirements for bankruptcy actions to apply from the discharge or dismissal date, whichever is applicable, and requiring a longer elapsed time period for Chapter 13 bankruptcies that were dismissed.

For all bankruptcy actions, the elapsed time period to reestablish credit will now be measured from the bankruptcy discharge or dismissal date.

For all bankruptcy cases, other than Chapter 13 cases, the time period to reestablish credit remains at 4 years.

For Chapter 13 cases, a distinction is being made between Chapter 13 bankruptcies that were discharged and those that were dismissed.

The updated policy recognizes the fact that borrowers have reestablished credit through the successful completion of a Chapter 13 plan and subsequent discharge by requiring only a 2-year time period to elapse.

A borrower who was unable to complete the Chapter 13 plan and received a dismissal, however, will be held to a 4-year time period for reestablishing credit.

More than one bankruptcy

Establishing a new policy for borrowers who have more than one bankruptcy filing in the past 7-year time period.

A 5-year elapsed time period is now required to reestablish credit from the most recent discharge or dismissal date for borrowers who have more than one bankruptcy filing in the past 7 years.

The presence of multiple bankruptcies in the borrower’s credit history is evidence of significant derogatory credit and increases the likelihood of future default. The greater the number of such incidences and the more recently they occurred, the higher the credit risk.

Pre foreclosures / short sales

Establishing a new policy for preforeclosure sales.

A preforeclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satisfy the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer.

Due to the increased incidence of preforeclosure sales, Fannie Mae is establishing a 2-year elapsed time period for reestablishing credit following completion of the action.

See the source document: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0816.pdf for full chart.

Here is good news: the investor limit is changing from 4 houses to 10 but Fannie Mae has set the requirements so high that only the cream of the crop will get funded:

Under the new rules, investors will be able to own a total of five to ten financed properties “if they meet … (Fannie’s) eligibility and underwriting standards,” according to a bulletin the company just sent out to lenders.

Loan- to-value ratios on Fannie Mae-financed investor purchases will now go as high as 75 percent for single unit acquisitions and as high as 70 percent for projects with two to four units, provided the applicant has a minimum FICO credit score of 720.

Borrowers will also have to pass a series of other tests including the following:

First, they cannot have filed for bankruptcy or been foreclosed upon at any time during the past seven years, and they’ve got to have a spotless record on their other mortgages — no late payments of 30 days or more — during the previous 12 months.

Second, they’ve got to fully document rental income for any new acquisition, along with their revenues on all other investment properties, backed with two years worth of federal income tax returns.

Third, applicants owning no more than four units will need to show six months of bank reserves to support the new investment purchase, plus two months of reserves for every other investment property they own. Borrowers who own five to ten properties will need to show that they’ve got six months of reserves on hand for every property.

There’s no question here that Fannie is looking to deal ONLY with the most financially stable multi-unit investors — to skim the cream off the top of the investor market, and reject everybody else who can’t come up with the heavy reserves.

Source: Realty Times

Here is a little more technical information.

February 9

Source: allregs.com

Fannie Mae is updating the policy that pertains to multiple mortgages to the same borrower. Fannie Mae’s current policy limits the number of one- to four-unit financed properties in which the borrower may have an individual or joint ownership interest to four financed properties when the mortgage being delivered to Fannie Mae is secured by an investment property or second home. The limitation on the number of mortgages currently being financed applies to the total number of properties financed, not just the number of mortgages sold to Fannie Mae. Fannie Mae is modifying this policy to allow investor and second home borrowers to own five to ten financed properties if they meet certain eligibility and underwriting and delivery requirements as outlined in this Announcement. Unless otherwise stated, these requirements apply to all mortgage loans whether underwritten manually or through Desktop Underwriter^® (DU^®).

Eligibility Requirements

Eligibility Requirements: Five to Ten Financed Properties
Transaction Type	Number of Units	Maximum LTV/CLTV/HCLTV	Minimum Credit Score
Second Home or Investment Property
Purchase	1 Unit	75/75/75%	720
Limited Cash-Out Refinance	1 Unit	70/70/70%	720
Investment Property
Purchase and Limited Cash-Out Refinance	2-4 Unit	70/70/70%	720

Reserve Requirements:

Reserve Requirements for Second Homes, Investment Properties, and Multiple Financed Properties

Fannie Mae is implementing new reserve requirements that apply to all second home transactions and to investor and second home borrowers that own or have an interest in multiple financed properties. The amount of required reserves varies depending on whether the subject property is a second home or investment property, and on the number of other financed properties the borrower currently owns. The reserve requirements are as follows:

Underwriting and Delivery Requirements