How are increased reserve requirements affecting returns?

[Ryan Daigle]

With the new reserve requirements of 12-18 months for Fannie/Freddie loans, how is this affecting your projected returns? That's a lot of capital you have to account for that's not getting a return.

Can you plan to return that capital to after some period of time, or do the agencies require it to remain in place for the life of the loan?

[Brian Burke]

It won't affect my projected returns at all, but it will affect the actual returns of sellers.  Since all I'm doing is solving for a return when calculating my strike price, the added reserve requirements just mean that I'll end up solving to a lower price in order to project the same return as I otherwise would have projected at a higher price without the added reserves.