BluefoxToday blog : Fannie Mae update to boost housing demand

Fannie Mae update to boost housing demand

That's good news. One of the main barriers to getting the residential real estate market to change direction is the lack of demand. Well, there is some demand, it's true, thanks to very low mortgage interest rates and affordable prices. But they alone won't cut it because the underwriting guidelines remain rather strict and keep many qualified borrowers from getting a home loan. And then there is the poor economy.

But help is on the way. A revised Fannie Mae policy is going to give the demand function a nice shot in the arm. The change involves how many mortgages the agency will buy from one borrower. The limit used to be four, whittled down there when the current downward housing spiral started to gallop full steam.

Fannie Mae is updating the policy for the better to let investors and second home buyers now acquire five to ten financed properties, as long as they meet quite tough eligibility and underwriting requirements. A borrower cannot have any lates, or delinquencies, in the last 12 months on any of his existing mortgages, for instance. No bankruptcy or foreclosure in the last seven years. Also, reserve requirements apply to the subject property and other financed investment homes. There are others, but this clearly shows that the moderation is mostly relevant to experienced and well-heeled investors. The change is scheduled to go into effect March 1, 2009.

Regardless of its limits, the update will give the still-struggling demand side a much-needed kick. That's were the solution to the recovery of the housing market lies. It's another step in the right direction to make mortgage funds more available to qualified borrowers. The investor community is already active here in Las Vegas, and is undoubtedly so across the country, and is essential in helping absorb some of the high housing inventory. Now it has even more reason to do just that.

Besides, this is also psychologically valuable. People will notice that the strict mortgage requirements are beginning to ease up, which leads them to believe that the marketplace is taking its first meaningful measure or two to restore order. And, predictably, more is likely to follow.

 

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Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst 

www.BluefoxToday.com - syndicated mortgage, housing and property management blog

eskokiuru@gmail.com
My cell: 702-499-1006

Comment balloon 13 commentsEsko Kiuru • February 21 2009 09:35PM

Comments

Hi Esko, The Fannie Mae changes will certainly help the investors build their portfolios during this attractive time to get great deals!

Posted by Marian Gregor-Ann, Arbor area Real Estate (Keller Williams) over 9 years ago

Thanks for sharing.  I did not know of that change.

Posted by Jenniffer Lee, Broker/Owner/Realtor at RE/MAX Complete Solutions (RE/MAX Complete Solutions) over 9 years ago

Esko - thank you for sharing this info.  One thing at a time I suppose.

Posted by Aaron Auxier - "Hollywood's Connection to Vegas"® (Realty ONE Group) over 9 years ago

Hmm, how come I did't get a date box on top?  Perhaps a bug?  Or, is there only one date box per day?  If so, they should change colors depending on the day of the week.

Posted by Aaron Auxier - "Hollywood's Connection to Vegas"® (Realty ONE Group) over 9 years ago

Jeff I agree.  Step like this do far more to improving things then all the artifical bailouts that the government has been trying.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 9 years ago

Marian,

Real estate investors will like this one a lot.

Posted by Esko Kiuru over 9 years ago

Jennifer,

This is good news for the demand side.

Posted by Esko Kiuru over 9 years ago

Aaron,

We are slowly heading in the right direction.

Posted by Esko Kiuru over 9 years ago

Aaron,

Changes are coming so fast that it's hard to keep track of it.

Posted by Esko Kiuru over 9 years ago

George,

Right on. These types of adjustments can really help out a lot.

Posted by Esko Kiuru over 9 years ago

Esko, at least a little return to common sense. I was shocked when Fannie & Freddie implemented the restrictions back in the late summer. Make it tougher, OK. But to limit during a time when we need investors to absorb supply was short-sighted.

I applaud the GSE's for what they have just done.

Jay

Posted by Jay Williams, Mortgage Loan Officer - Getting You The Right Loan (Greenville, NC) over 9 years ago

Jay,

Good to see that they, too, can adjust to help in the big picture.

Posted by Esko Kiuru over 9 years ago
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