Fannie and Freddie out?

Question

Hey guy, I know that it is possible to get loans in both your wife and husband's name seperately as long as you both qualify for a property on your income alone but does anyone know the exact procedure to do this on Fannie/Freddie loans so I can max out us both at 10 each?

Zack Karp · Answer

@Jessy Milner

You do the first 4 Fannie, 5-6 Freddie, then 7-10 Fannie.  You can't do 10 with Fannie and 10 with Freddie.

Easier said than done.  The reserve requirements get much heavier for 7-10.

Kerry Baird · Answer

It is the 5% down that catches my attention.  I expect to put 20-25% down on investment properties.  Over the years, I have noticed that the plex units tend to require more down than single family properties.

If you want the low down options, then you’d have to get an owner occupied property and mortgage...might as well start with FHA for this discussion.  Remain a year, and move to the next, turning the last into a rental.  Rinse and repeat.  Otherwise, I expect to save up (or refi to pull cash out, when applicable) for the next investment property.

Stephen Torti · Answer

I seem to be "fannie and freddied" out at only 1 loan, at least with 5% down.  My bank is telling me that they can't portfolio another 2-3 unit loan at 5% down and that F&F have their guidelines set that after the first multi unit you need to have a 25% commercial loan.  Does this make sense to anyone? I've shopped it around to 2 banks so far... working on more when they open.

#loan

#Finance

#Multifamily

Bill Gulley · Answer

I only got to page 124. If someone can get to 939 and post it or a direct link it would be great, I can't click/drop on this machine.

In some states specifically and generally, the debt obligation includes the security agreement. Only one person must be on the note making the financial obligation but all in title are required to sign the security agreement.

My thinking is that while the limitation of ten may specify the note, I'd think that a lender selling the loan to fannie won't go there as they will tend to tie the note and deed of trust or mortgage together staying on the prudent side.

Look also to credit issues and foreclosures, on an application you'll be asked, have you every had any foreclosure or given a deed in lieu of foreclosure on any debt or mortgage. The question wasn't were you on the note or did you fail to pay, it asked if you gave a deed or were in foreclosure. You don'y have to be on the note to give a deed or be in a foreclosure if you were in title.

So, someone in title can be included in the credit analysis even if they were not on the note. Along the same lines, anyone in title has an affiliate relationship to the note even if they are not financially responsible.

Another issue is bankruptcy, you won't see a husband and wife go there alone, or in any suit where joint assets may be at risk. So, while one is not required to be financially responsible, all parties in title pose lending risks.

So, IMO, while the letter of the note requirement may say no more than 10 to any one borrower, I doubt that will fly for very long.  One party may get the ten, even qualifying I'd say that will be tough, but getting a spouse to ten as well doesn't seem likely as it rubs the intent of the rule. So, on the prudent lending side I'd say a lender won't go there even if they could.

Now, could one get 6 and the other 5, that's more realistically feasible, would fannie buy that 11th note between those two, I can see them going there, I can also see them saying they won't buy it too. I'd have a better idea of this example if I could read the guideline. :)

Chris Martin · Answer

I don't know if you can do 10 each, if each are required to sign the mortgage or deed of trust (the security instrument). You'd end up with signatures on 20 loans.

https://www.fanniemae.com/content/guide/sel011713.pdf page 934.