Walker’s Wholesale Houses

Beginning April 1, 2009, it’ll be tougher to qualify for a loan without having to pay increased fees.

Sure, they changed the rules to back to investors being able to get 10 loans, but the qualifications are ridiculously strict.

What do you think are the implications for your retail buyers?

Under Fannie’s (Federal National Mortgage Association) and Freddie’s (Federal Home Loan Mortgage Corp.) new guidelines, even applicants who assumed their FICO credit scores would get them favorable rates will be charged more unless they come up with down payments of 30 percent or more.

For example, a buyer with a 699 FICO score who can bring a sizable down payment of about 25 percent to the table will now get hit with a 1.5 percent “delivery” fee at closing under the new guidelines.

A buyer with a FICO score between 700 and 720 will pay an extra three-quarters of a point. Even someone with a 739 FICO — once considered a platinum guarantee of the best rates available — will get dinged with a quarter-point add-on.

via Fannie Mae, Freddie Mac to hike fees | Richmond Times-Dispatch.

The rules go on to share that condos will require 25% or receive a .75% penalty fee, no matter how high their score is.  Duplexes that are owner occupied on one side, and rented on the other, will get a 1% point charged.

Cash out refis will be charged up to 3 points (3%).

Of course, realtors are mad.

Real estate investors who are remaking homes available to first time home buyers are finding that it’s not the availability of buyers that is the problem.  It’s Fannie and Freddie making it darn near impossible to get a qualified buyer.

So what?

This suggests that a flood of lease options might be your exit strategy — buyers who cannot get funded now, but when the credit markets stablize, they might.

What do you think?

Date: July 6, 2008

Here is FHA’s Flipping policy

FHA requires that: a) only owners of record may sell properties that will be financed using FHA-insured mortgages; b) any resale of a property may not occur 90 or fewer days from the last sale to be eligible for FHA financing; and c) that for resales that occur between 91 and 180 days where the new sales price exceeds the previous sales price by 100 percent or more, FHA will require additional documentation validating the property’s value. FHA also has flexibility to examine and require additional evidence of appraised value when properties are re-sold within 12 months.

The following sales are exempt from the above mentioned policy

* Sales by HUD of its Real Estate Owned

* Sales by other United States Government agencies of single family properties pursuant to programs operated by these agencies.

* Sales of properties by nonprofits approved to purchase HUD-owned single-family properties at a discount with resale restrictions.

* Sales of properties that are acquired by the sellers by inheritance.

* Sales of properties purchased by employers or relocation agencies in connection with relocations of employees.

* Sales of properties by state and federally charted financial institutions and Government Sponsored Enterprises.

* Sales of properties by local and state government agencies.

* Upon FHA’s announcement of eligibility in a notice (i.e., ML), sales of properties located in areas designated by the President as federal disaster areas, will be exempt from the restrictions of the property-flipping rule. The notice will specify how long the exception will be in effect and the specific disaster area affected.

We hope you find this information helpful!

via Real Estate Blog – FHA title seasoning lifted for bank owned homes as of July!.

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