What’s Fannie Mae up to now? Will FHA follow?
You know that when the pendulum swings too far one way, then it swings back too far the other way, until it finally settles someplace closer to center. Well, we’re not close to the center. Fannie Mae’s free and loose lending practices got us into this mess and they are still reacting to the fall out of their bad business practices. The latest bump in the “Real Estate Road to Recovery” is that they are cracking down on buyers who already have a home and are purchasing another home to move into without selling their previous residence. Essentially what Fannie Mae’s Announcement 08-16 dated 6/25/08 says, is that if a borrower wants to keep their property and rent it out, they must have 30% equity remaining in that property. If they don’t, then they can’t use any rental income in qualifying for their new purchase. So, they must qualify with both mortgage payments counting against them. As of today’s date, FHA has not adopted the same policy and there is no indication that they intend to. But keep in mind that many lenders will start to adopt their own credit policies to ensure that their loans are sellable on the secondary market.
The question you may be asking at this point is why? Why now? Why me? Why? Why? Why? Well…apparently there have more than a few people who have decided to purchase less expense homes (because the one they have been living in, they really couldn’t afford in the first place) and then they stop making payments on the more expensive home and the bank forecloses. Thus allieviating the homeowner from that debt while they are now living in a home they can probably afford. Yes, their credit is trashed but they already bought their new home.
People and their creative solutions will never cease to amaze me.
I would send you to fanniemae.com for more information about this change and other interesting facts, except that this public site is just a bunch of worthless fluff. Check it out for yourself and prove me right.
Remember, the “Real Estate Road to Recovery” should be enjoyed. Embrace the journey.
Wallace…
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