The new changes that took effect on Oct. 1 are big news for smaller investors, and are designed to help Fannie clear out its inventory of foreclosed properties. Previously, Fannie Mae guidelines limited investors to 10 mortgages on nonowner-occupied residences. And, while the new policy allows the purchase of up to 20 properties by one investor, half of the purchases now are required to be Fannie Mae foreclosures.
Here’s the fine print:
- Minimum downpayment (on each home) is 30%
- No mortgage insurance needed
- Appraisal not required
- Contributions from sellers and other interested parties are limited to 2%
- Purchase loans only, no refinances
- No second homes
- Properties 11 through 20 have to be Fannie Mae foreclosures
- 203k type renovation loans available through Fannie Mae finance partner
Investors have to purchase properties through the HomePath program and finance those homes through Fannie Mae’s finance partner, Prospect Mortgage.
Over the past months, investors have stepped into markets all over the country, whether to concentrate on "flipping" properties, or renovating and renting. I've sold my share of Fannie Mae homes - call me for details.