|Fannie Mae has increased the number of financed properties an investor may own. Reserve requirements, however, have been tightened.The maximum number of properties an investor can own while remaining eligible for a Fannie loan has been raised from four to 10, according to Announcement 09-02 released Friday. The maximum is effective on loans purchased on or after March 1 or delivered into mortgage-backed securities issued on or after March 1.
Qualifying borrowers will need a credit score of at least 720 and a maximum loan-to-value of 75 percent on a 1-unit purchase. Limited cashout refinances and 2-4 unit properties will be limited to 70 percent LTV.
No prior bankruptcies or foreclosures are allowed within the past seven years, and the borrower can have no 30-day delinquencies during the previous 12 months.
Rental income on all properties will be verified through two years’ tax returns obtained by the lender with either a Form 4506 Request for Copy of Tax Return or Form 4506-T Request for Transcript of Tax Return.
Reserves vary from two months on the subject property if it is a second home to six months’ reserves for each financed property if five or more are owned. In addition to principal, interest, taxes and insurance, reserves will include mortgage insurance premiums, ground rent and special assessments. Also factored into the reserves will be association fees, cooperative corporation fees and subordinate financing.
The updated reserve requirements apply to whole loans purchased or securitized on or after June 1.
Borrowers on HomeStyle Renovation loans will continue to be limited to four financed properties.
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