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?

Fannie Mae and Freddie Mac - New Loan Modification Program

As reported by Bloomberg - "Fannie, Freddie Boost Effort to Minimize Foreclosures":

Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, will accelerate anti- foreclosure efforts with a new loan modification program designed to cut monthly payments for struggling homeowners.

Fannie and Freddie, operating under a government conservatorship, will target loans in which borrowers are at least 90 days delinquent and have high loan-to-income ratios, officials from the Treasury and the Federal Housing Finance Agency said today at a press conference in Washington. The companies may offer reduced interest rates and longer terms of as much as 40 years to trim monthly payments.

The loan modification plan:

Under the proposal, mortgage servicers will work with borrowers to reduce monthly payments to 38 percent of their gross income, a level considered a threshold for affordability, using a combination of lower principals, interest-rate reductions and extensions, the people said. The plan doesn't include money from the Treasury's $700 billion bank rescue.

Homeowners will have to apply for the program, and their loan modifications won't become final until they have made three consecutive payments. Their new monthly payment will include all of their monthly housing costs, such as taxes and even condominium payments, one person said.

With increasing regularity, these loan modification programs are becoming commonplace in the industry. In fact, Citigroup is joining the party as well. We've allowed our blog to be hijacked by the relentless news of late regarding the loan modification mania. If you find yourself similarly obsessed, you can find links to our previous loan modification articles below with most certainly more loan modification articles to follow. The housing market bust has created the loan modification boom.

1. Loan Modification Specialist - Don`t Miss Your Calling!
2. Loan Modification Programs - Officially in Vogue?
3. Loan Modification Programs - IndyMac and B of A Lead the Way
4. JPMorgan Chase Loan Modification - Mortgage Program Expanded
5. JPMorgan Chase Loan Modification - Moratorium on Foreclosures

Mortgage Rates Popped Higher This Past Week

Freddie Mac reported in it's "Primary Mortgage Market Survey (PMMS)" that mortgage rates pushed significantly higher during this past week:

"... 30-year fixed-rate mortgage (FRM) averaged 6.46 percent with an average 0.6 point for the week ending October 16, 2008, up from last week when it averaged 5.94 percent. Last year at this time, the 30-year FRM averaged 6.40 percent. This week's increase of 52 basis points was the largest weekly increase since the week ending April 17, 1987, when the 30-year FRM rose 84 basis points.

The 15-year FRM this week averaged 6.14 percent with an average 0.6 point, up from last week when it averaged 5.63 percent. A year ago at this time, the 15-year FRM averaged 6.08 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.14 percent this week, with an average 0.6 point, up from last week when it averaged 5.90 percent. A year ago, the 5-year ARM averaged 6.11 percent.

One-year Treasury-indexed ARMs averaged 5.16 percent this week with an average 0.6 point, up from last week when it averaged 5.15 percent. At this time last year, the 1-year ARM averaged 5.76 percent."

Mortgage rate averages as noted by region:


Will we continue to see rising rates?