{"id":75,"date":"2008-11-17T08:38:31","date_gmt":"2008-11-17T16:38:31","guid":{"rendered":"http:\/\/www.rentecdirect.com\/blog\/?p=75"},"modified":"2016-12-27T15:59:21","modified_gmt":"2016-12-27T23:59:21","slug":"investors-how-to-deal-with-the-new-4-property-limit-guideline","status":"publish","type":"post","link":"https:\/\/www.rentecdirect.com\/blog\/investors-how-to-deal-with-the-new-4-property-limit-guideline\/","title":{"rendered":"Investors – How to Deal With the New 4 Property Limit Guideline"},"content":{"rendered":"

If you’ve tried getting a conventional loan recently, you may have ran into this brand new roadblock.\u00a0 Fannie and Freddie have implemented a new guideline for conventional real-estate loans.\u00a0 They limit you to a maximum of 4 total properties.\u00a0 The moment you go to finance that 5th property you smash into their new brick wall.<\/p>\n

I’d say this is completely ridiculous.\u00a0 The foreclosures are caused by two groups of buyers.\u00a0 The widely publicized primary residence homeowners who were convinced to sign into an adjustable rate mortgage, and the lesser heard of builders who secured construction loans for building their projects, and then converted them to investment loans once the project was complete.<\/p>\n

I truly feel for the first classification of folks.\u00a0 To be booted out of your primary residence because the bank increased your rate is absolutely a shame.\u00a0 Some may say shame on the buyer, and yes, that is somewhat true.\u00a0 They should have read those 85 pages of small print text provided at closing.\u00a0 But I say shame on the banks, and more importantly the brokers who sold these loans.<\/p>\n

Now the builders, therein lies the true catalyst to this problem.\u00a0 Construction loans are often short-term and high rate.\u00a0 Builders across the nation over the past few years have over-built, and now so many brand new homes sit vacant.\u00a0 The builders converted the loans to residential non-owner occupied loans, and those are the loans they are defaulting on because they can’t sell their houses.\u00a0 For those of us who actually use residential non-owner occupied conventional financing for true investment properties, we are penalized.\u00a0 Because such a high percentage of converted construction loans are defaulting, not only are the banks increasing restrictions on non-owner occupied loans, but so are the mortgage insurance companies.<\/p>\n

There’s a few ways around this new guideline.<\/p>\n