Friday, March 13, 2009

Great Financing News for Investors

Investors, great news! Last month, Fannie Mae made announcement to allow investors to own up to ten financed properties. This is one change to their policy, which earlier, investors were only limited to finance up to four properties only. Fannie Mae finally realized, experienced and bona fide investors should be allowed to conduct their business without interruption.

The new policy comes with set of requirements:

• No bankruptcy or foreclosure in the past 7 years
• No delinquencies in the past 12 months
• Full documentation of rental income on the subject property and 2 years of federal income tax returns on rental income from other properties
• Two to six months of liquid financial reserves, depends on whether it is a second home or investment property

Despite this change, I also hear many lenders take underwriting to the other extreme. Some borrowers with perfect credit score have been scrutinized and have a hard time getting a loan. Financing is definitely scarce at this point.

Cash buyers usually have the advantage of negotiating with sellers, especially for REO properties. Banks are furious to unload properties from their balance sheet and they are more willing to settle for less in exchange for cash and faster closing.

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