Working in the mortgage business sometimes I forgot that FHLMC and FNMA are competing companies, most lenders work with both companies so they just seem to complement each other not compete! Changes like FNMA SEL 2016-03 shows that they definitely compete with each other.
FHLMC changed their maximum number of financed properties from four to six as of October 26, 2015. FHLMC took the lead on higher LTV’s for borrowers with six financed properties and cash out for those additional properties. In case you missed this information you can get the highlights on our blog “Freddie Opens More Room For Investment Properties”
FNMA has now reclaimed the lead on March 29, 2016 with FNMA SEL 2016-03 check out these highlights.
- Standard eligibility requirements now apply from one to six properties
- Financed properties are defined as properties the borrower is personally obligated (good bye LLC rule!)
- Reserves has been changed to percentage of unpaid principal balance (instead of PITI payments). For borrowers with four or less properties -2% of UPB, five or six properties 4% of UPB, for seven to ten properties 6% of UPB. Depending on the mortgage balances, this will lower the reserves needed to close for some of the borrowers.
- DU 10.0 is being released on June 25, 2016 and will be updated to help handle multiple financed properties (previously this has been a manual process)
More good news, FNMA states that these changes can be used immediately and lenders do not have to wait for FNMA to change to DU 10.0. As we always recommend please review these guidelines in full, the links we provided above are directly to the announcements and guidelines at FNMA.
With the market now opening up more room for borrowers with more properties, make sure that you have a good tool to properly evaluate and determine the income for each rental. Uberwriter can handle your REO needs, whether your using lease agreements or Schedule E to determine income.