Investors BEWARE: Recent changes in Investor Loan Requirements

Fellow Investors, BEWARE!

Okay guys, I had to start it out this way, because in 2009 we all have been watching the lending industry tighten, and expected to feel it more as purchasers of 2nd homes and investment properties. This piece will outline the recent changes in the RESERVE REQUIREMENTS, DOWN PAYMENTS, RULES for MULTIPLE MORTGAGES and FORMS needed to successfully get a loan to purchase investment property.

Now, the way this works is, Fannie Mae will guarantee, or purchase loans created by banks, if they meet these criteria. Banks prefer to write loans that meet Fannie Maes criteria, because they can then sell them and become liquid again for more lending opportunities. I bring this up, because private lenders will follow suit closely, but will tend to be looser.

WHAT TO EXPECT : THE BREAK DOWN

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1. MULTIPLE MORTGAGES : Total Number of 1-4 unit properties a single investor is allowed to have financed at the same time. ( 5 - 10 ) Criteria to follow

2. RESERVES : Reserve requirements will now be calculated (PITIA)

Principle;Interest;Taxes;Insurance, Association Dues/Assessments

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REQUIREMENTS : WHAT YOU WILL NEED TO QUALIFY

effective June 2009

1. DOWN PAYMENTS : 25% down for purchase, 30% equity for Limited Cash Out Refinance.

2. No history of BK or foreclosure within the past 7 years

3. No delinquencies within the past 12 mths on any mortgage loans

4. Rental Income must be fully documented on subject property

5. Rental Income from already owned properties must be fully documented by Tax Returns

6. 4506 T form will be requested

(this form will allow them to request verification of income from the IRS)

7. Form 3170 will be requested

(This is a rider that I will explain in great detail in a later blog. Basically, assigns the rents and leases should you default on the loan)

8. Reserves :

If this is your first investment property, 6mths reserves will be required from now on.

If you own 1-4 financed investment homes already

• (2) months reserves if loan is for a second home


• (6) months reserves if loan is for an investment property


• (2) months reserves on each other financed home shown on credit report

If you own 5-10 financed investment homes

• (2) months reserves if the loan is for second home


• (6) months reserves if loan is for an investment property


• (6) months reserves on each other financed home shown on credit report

* requirements apply to both manually underwritten and DU underwritten files

** Rent Loss insurance may be required by the lender, it is not required by Fannie Mae. ( I would get it anyway. It doesn't jack up your premium that much.

So that is that. I hope this is plain english and the beginner investor can read through and know what to expect when going through the loan process. For great positive rental cash flow opportunties check out http://www.reishoppe.com/ . Find it, Fix it, Tenant it, Manage it! True Turn Key Real Estate Investment Opportunites. 866 927 6417

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