Max Fannie Mae loans?

Question

I hear 4 and I also hear 10. Which is it?

Paul M. · Answer

But wouldn't a direct lender have less favorable terms if they are not reselling the loan?

Bill Gulley · Answer

Hard money lenders are portfolio lenders they don't sell in the secondary market nor are they federally insured institutions such as a bank or credit union. To get past 4 in a conventional loan you might try local and regional banks and credit unions. A good mortgage broker should know who is funding beyond 4 as well as portfolio lenders who hold the notes. You'll also find that these portfolio loans will have a balloon at 7 years of less usually. Eventually you'll need to go to a commercial lender anyway.

Paul M. · Answer

What is the difference between a direct lender and a hard money lender?

Arthur Garcia · Answer

Paul Morgan - I've found that brokers can't really help you once you  get past 4 loans, just my experience.  I think the problem is once you get past 4, there are too many sets of underwriting overlays and I assume commissions (between: broker & lender).

I'm not suggesting Wells or BOA either, the big banks won't usually service investors who already have 4 loans.  You're going to have to find a mortgage company/ direct lender they usually have the words "capital" or "funding" in their names, just FYI.

You may also have luck working with a community bank.  They are more likely to work with you and even help you develop a game plan.

AG

Paul M. · Answer

So going with a Direct Lender means contacting TD Bank, Wells Fargo yourself.  I would assume if anyone was going with a mortgage broker, they wouldn't have to worry about the 4 unit limit, because the broker would know which lenders did 10 properties?

Bill Gulley · Answer

And, Direct lenders have underwritting authority and make the loan, fund at the table and sell the note with recourse in the secondary or they can hold for awhile for a larger block of loans to another investor.

Arthur Garcia · Answer

Paul Morgan They are a "direct" lender, but they still sell the note.

The difference is that they are not a "broker", they don't shop your financial info around to various institutions.  Direct lenders create the note (with their own money) then sell it to fannie.

I hope that clarifies.

AG

Arthur Garcia · Answer

Ditto everyone here.

It is currently at 10 loans, however most lenders have additional underwriting overlays that may prevent them from lending more than 4 loans.

Here is the breakdown of credit info:

loans 1-4 - 650 or better (20% - 25%)
Loans 5-10 720 or better (25% down)

loans 1-4 you CAN cash out refi at market value after 12 mo.
Loans 5-10 you can only do a rate/term refi as soon as 6 mo.

My advice is to work with a direct lender so you don't have escrow blow-up on you in the 11th hour due to some new underwriting 
policy.

I hope that helps!

AG

Paul M. · Answer

It was 4 for awhile, then it went back to 10.  But some banks are keeping it at 4.  So you have to shop around if you get rejected because of that reason, until you find the bank who will do it.

Bill Gulley · Answer

I believe it's 10, being the maximum. And amounts in some areas are $729,750 while 417,000 for FHA and conventional is generally the max to jumbos.

But this varies nationally due to other aspects. Loan losses in an area, home affordability, interest rates, origination levels and other factors such as blocking the loans to investors.

While fannie and freddie may have their limits the direct lenders/originators may institute further restrictions as well, so you may not find a uniform limit across the country. They may do so since they may repurchase a bad loan.

Good luck

Max Fannie Mae loans?

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