With it's last dying breath as a privately-held company, Fannie Mae instituted new guidelines that may seriously impact real estate investors. Mortgage rates are dropping as a result of the fed's takeover of Fannie Mae and Freddie Mac; however, the new guidelines for investment properties include additional fees and restrictions.

Fannie Mae just rolled out new mandatory loan fees for investment property mortgages ranging from 1.75% to 3.75%, based on loan-to-value ratios. And for those who can't sell their home and convert it to a rental when they buy a new home--and there are many, at least in Las Vegas--it will be much tougher to qualify for a mortgage.

These "accidental" investors must have 30% equity in the "converted" property to use the rental income on a mortgage application; if they don't meet this threshhold then the entire mortgage payment is counted as a monthly income loss! This won't affect many LVA readers, but it will certainly affect thousands of homeowners, when qualifying for a mortgage is further from their reach than it already was.

The rule that could affect more successful, experienced real estate investors (and this includes a number of LVA readers) is the new cap on the number of investment properties that can be financed. Fannie Mae just reduced the cap from 10 properties to 4. If you own 4 properties with mortgages, an application for another investment home--and even a second/vacation home--will be denied in underwriting.

But, of course, there is a loophole. Fannie Mae no longer considers a home under ownership if it is held by a corporation - even if the borrower is the sole owner of the corporation. It's time to move your investment properties into LLCs if you haven't done so already.

I see no sign of the market slowing down any more than it normally would in September. Sales do typically drop off by about half in the winter months. With down payment assistance disappearing, there may be fewer qualified buyers in the market in the foreseeable future. Put these 2 factors together and I think we'll see less competition for the best deals for a few months. If you've been holding off, it's time to buy.

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