New Fannie/Freddie Rule on Multiple Properties

Well, Fannie and Freddie are at it again. It's like a roller coaster ride. Guidelines and rules seem to be changing faster than a formula 1 racecar. The rule now regarding one person financing multiple properties is set at 10. However, the stipulations are that if it is a primary or 2nd home, it must have an LTV of 75% and borrower must have a 720 Fico score. If it's a investment property, it must have an LTV of 70% and borrower must have a 720 Fico as well. But here is where it gets tricky. If it is an investment property, you must show 6 months of PITI (Principal, Interest, Taxes & Insurance) as reserves on every property that you own. So be aware that if you don't have the cash to show that you have the reserves, you might just be out of luck. One way to get around this is to put your properties into LLC's. Once they are in a Corporation's name, they don't get counted in the mix.

Major complication is that there is not a lender that I've found yet that has adopted this new guideline. So even though Fannie/Freddie say you can do it, the lenders and their investors haven't jumped on the bandwagon just yet. So stay tuned....

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