A Slap in the face for investors

Investors: Start Your Engines… 6 weeks to go…

Investors hoping to finance through a lender who sells on to Fannie Mae, 12/1/08 is a date to remember. Nail your mortgage commitments quickly - in the next six weeks if you can. Because Ms. Mae - plans to load on extra fees across the board for investor loans purchased after December 1st (due to market conditions?)

Freddie Mac is imposing similar fees, and its increases take effect even earlier on November 7th.

Worse still, some large private mortgage insurers plan to stop underwriting investor loans altogether, effectively cutting off financing support for low-downpayment, high leverage rental home deals, no matter where the property is located. This could mean a minimum of 20% down. Just like the old days.

Fannie’s new fees will hit the full range of investors, from those with low downpayments to those who are able to put down a wad of cash. Come 12/1/08, investor applications where the downpayment is between 10 and 15 percent, can expect a 3.75 point “adverse market fee” - up from two and a half points currently.

Loans where an investor can lay down 20 to 25 percent will be subject to a three point add-on, and those able to do even better than that (40% or more) will have to cough up one and three quarter points.

The new fees come on top of earlier Fannie Mae restrictions, including limiting investor applicants to no more than four rental properties, plus a variety of restrictions on condos, including bans on mortgages in projects where more than 49 percent of the units are owned by investors.

It’s a harsh world.

Brought to you by the Orlando Real Estate Pros