Over the last few weeks we have been talking about some big changes in the guidelines over at Fannie Mae, but Freddie Mac is also in the process of making some big changes to get more business. There are a pair of changes when put together are going to open up some new opportunities for investment property business that were not possible before. Let’s take a look.
Change number 1
Freddie Mac has now raised the maximum number of financed properties from four to six with no change to LTV, credit score, or transaction type. Yes, you can get cash out on property number six! This change is out lined in seller service guide volume 1 under section 22.22.1. This will come as welcome news as Fannie Mae does allow for up to ten financed properties but once you finance property number five you can only close purchase transactions or rate and term refinances. In addition to the transaction type FMMA also lowers the LTV, increases the reserve requirements, and the credit score, this won’t be a concern with Freddie.
Change number 2
Freddie Mac is no longer requiring a two year history to use rental income for investment properties. The advantage here is if you have a borrower that has been acquiring properties but has not had 2 full tax seasons to show the proper history. Now your newer investment purchasing borrowers can move forward a few more properties in a shorter time. This change was made in the seller servicer guide volume 1 under section 37.14.
We will have more changes to talk about as both Fannie and FHLMC have been putting out guideline updates that are changing up the mortgage origination and underwriting fields very rapidly! Now that you have the new rules, to make your actual income calculations accurate to the penny make sure your using UberWriter. UberWriter has all the income rules from both FNMA and FHLMC built in, check it out for free at www.uber-writer.com.
Until next week, happy underwriting and originating!