New rules from Freddie & Fanny affect Investors

If you are an investor or have clients that are investors, please be advised on the changes from Freddie Mac and Fanny Mae regarding financing for investment properties.

As of a month ago or so, you can no longer finance a residential non-owner occupied property through a regular 15-30 year fixed rate mortgage if you have 4 or more properties already financed, including your own residence and any equity lines of credit! It used to be you couldn't finance more than 4 properties per given year, but now that has changed to 4 properties - TOTAL!

I found that out the hard way! I sold one of my investment properties and was getting ready to do a 1031 Exchange, just to find out that I didn't qualify for a mortgage due to having more than 4 properties financed at this time! I cannot begin to tell you how angry that made me!

You would think that the 700 billion dollars that the banks got for the bail-out, would allow the banks to approve more rather than less mortgages, especially to people with good credit, good payment history, good income and a record of running a profitable business for many years! Or maybe not! After all they need the money to pay for their CEO's Christmas bonus!

Nevertheless, make sure to keep this change in mind and advise your clients as well so they don't initiate any purchases without securing the funds and end up not getting the property and paying taxes on an uncomplete exchange! (Undeveloped land, commercial properties and residential multi-units 5+ are not effected by this change!) Also, you might still be able to secure financing through other sources such as personal loans, hard money loans, commercial loans etc.