Are Investors Coming Back to Atlanta’s Homes for Sale Market?
In August of 2008, Fannie Mae announced the implementation of a restriction on loans for rental property. Known as Fannie Mae Letter 08-22, the letter stated that investors would be cut off after their credit report revealed four or more “financed properties”. Lenders stopped taking applications from investors almost immediately after that announcement. Prior to this change, Fannie had in place a “ten financed property” rule, but the lending industry often provided ways around that limit by offering portfolio loans that were underwritten to Fannie Mae standards. These portfolio loans vanished simultaneously with FNMA’s August 2008 announcement.
The devastating effect of this change has been to sideline almost all veteran home-investors at a time when the nation’s supply of bank-owned homes is strangling our real estate market. In Atlanta alone, there are thousands of bank owned homes clogging the market, making it impossible for the market to begin any type of recovery.
Editors at the Georgia Real Estate Report have learned that internal meetings at Fannie Mae have revealed that FNMA intends to eliminate the “four financed properties” restriction on lenders and revert to the “ten property limit”. According to this same source, the change will be announced “within a few weeks”. This information was revealed Thursday, February 5, but could not be confirmed by FNMA spokespersons in Atlanta. If this change occurs, and it appears that it will, this could indeed be the “bottoming out” that we have all been waiting for and the end of the abysmal performance of real estate during the current economic environment.
It is unknown whether or not lenders may once again offer “portfolio” loans that are underwritten to Fannie guidelines once this change occurs, but it seems logical that they will. Investor loans have always carried some premium, both in rate and points, making them more attractive to lenders than traditional loans. It stands to reason that if these investor loans are “full doc” and require a reasonable down payment, they can be as safe as an owner-occupant loan.
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