There are two major player in the lending industry right now, Freddie Mac and Fannie Mae, both of these companies are very important because they more or less dictate the rules and guidelines for lender and banks across the USA.
Freddie Mac recently released a guideline change – “We are revising our requirements for Investment Property Mortgages to reduce the number of financed properties in which a Borrower who owns more than one financed Investment Property may have an individual or joint ownership interest (including the subject property) from 10 to 4. Also, effective for Mortgages with Freddie Mac Settlement dates on or after August 1, 2008, the borrower on a cash-out refinance mortgage must have owned the subject property for at least six months prior to the note date of the new refinanced mortgage.”
Investors that hold properties titled in an LLC’s, will have to wait 6 months after they quit claim into their personal name to refinance.
Who is Freddie Mac and why are they so important?
Freddie Mac is a stockholder-owned corporation established by Congress in support of homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage backed securities and debt instruments in the capital markets or Wall Street. Historically, Freddie Mac has opened doors for one in six homebuyers and more than two million renters in America.
Investors need to start worrying when…
As of 6/3/03 the larger and more influential Fannie Mae has not changed their guidelines, but if they do change their guidelines, millions of investors would have to find new source of funding or be content with owning four or less properties.