Fannie Mae and Freddie Mac to Change 4-Home Investor Loan Limit?

From REALTYTIMES.com - "Investor Report: Rethinking Controversial Limits":

Here's some potentially good news for investors from the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac.

James Lockhart, who runs the agency, says there's been some "re-thinking" underway on the controversial limits on the numbers of rental properties investors can own if they're seeking new financing.

Current investor loan limitations:

Both Fannie Mae and Freddie Mac have imposed a four-unit limit, reversing their previous investor maximum of ten units.

The rationale for the change, according to the agencies, was their belief that investors who own higher numbers of rental condos and houses pose a greater risk of default, foreclosure and loss for the companies.

The restriction effectively shut out many small investors from Fannie's and Freddie's standard programs -- and pushed them into much higher-cost financing from so-called "hard money" lenders.

Perhaps a change is on the way?

In a letter to Charles McMillan, president of the National Association of Realtors, Lockhart said, "While no final decisions have been made, I can share with you the fact that the issue of raising the selling guide ceiling on investors loans is under active consideration at one of the (corporations), and reflects an appreciation of the role for investors in the housing recovery."

Realty Times obtained a copy of Lockhart's letter to McMillan, which was intended to respond to issues raised at the Realtors' annual convention in Orlando in November, where Lockhart spoke to two sessions. Lockhart did not disclose which company may soften its rule, but when one changes its standards, the other typically follows suit.

Reducing inventory will ultimately lead towards a stabilization of the housing market. With many economic markets in turmoil and housing prices having tanked in countless markets, real estate is beginning to get a second look from investors.

If Freddie and Fannie loosen the four-home limit imposed on investors and those investors have the financial means, they will most likely buy more than four homes since values in many areas are becoming increasingly attractive.

Real appraisals, a few dollars invested towards a down payment, and providing full documentation ... if an investor meets the said requirements, why shouldn't they be allowed to obtain lending to buy more than four properties?