Fannie Mae Rescinds 4-Property Maximum : Up To 10 Properties Allowed For “Bona Fide” Real Estate Investors

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Most people agree -- purging home inventory is paramount to the housing recovery, Fannie Mae just made that recovery a lot more likely.

The 5-10 Properties Program

Effective immediately, Fannie Mae is rescinding its 4-financed-property per person restriction.

Read the Fannie Mae official announcement, you get the sense that the nationalized group is getting with the program. This excerpt comes from the lead paragraph:

Fannie Mae is committed to providing financing opportunities for high-credit quality, bona fide investors. Experienced investors play a key role in the housing recovery.

The use of the adjectives "high-credit quality", "bona fide" and "experienced" was a conscious one, by the way. Fannie Mae is averse to first-time investors and other foreclosure opportunists. Instead, it wants to serve individuals with a history of owning and successfully managing rental property.

The program is called the 5-10 Properties Program. It's for investors with more than 4 financed homes.

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5-10 Properties Program Guidelines

Fannie Mae will now finance the purchases of 1-unit homes for investors with an interest in between 5 and 10 properties provided that all of the following guidelines are met:

• 25 percent downpayment on the investment property
• Minimum credit score of 720
• No mortgage lates within the last 12 months
• No bankruptcies or foreclosures in the last 7 years
• 2 years of tax returns showing rental income from all rental properties
• 6 months of PITI reserves on each of the financed properties

And lastly, to reduce fraud, Fannie Mae will now require all real estate investors to sign a form granting lenders permission to verify supplied tax returns against the official, IRS-filed version. 

This document is less commonly known as a 4506-T.

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Housing Benefits As Investors Are Welcomed Back

With the 5-10 Properties Program, for the first time since September, investors can go to auction and know that (relatively) cheap financing will be available from the government.  This speeds the reduction of REO inventory nationwide.  

In addition, with more investors eligible for financing, greater competition for prime foreclosed properties should follow, helping to keep home prices from falling into the abyss.

Not every bank sells loans to Fannie Mae, though, so if you think the new guidelines will impact your mortgage plans, be sure check with your loan officer first.  If your loan officer can't help, I can.

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