Looking at Real Estate Investor Fannie Mae Rules

At one time, very few people could tell you “who” Fanny Mae is. Today, most people realize Fanny Mae is not a “who” but a “what”. Specifically, Fannie Mae is a government backed entity that was the largest mortgage provider in the United States. Sadly, the reason people have heard the name Fannie Mae is not because of any positive developments. Instead, people are familiar with Fannie Mae due to its disastrous business practices. These business practices nearly led to the total collapse of the economy. While a federal bailout was provided to Fannie Mae, all is not smooth sailing in the lending world. In fact, the real estate investor Fannie Mae rules has changed. And, no, they have not changed completely for the better.

Probably the most significant changes in the real estate investor Fannie Mae rules centers on limiting the number of financed properties one can possess to four. This is a dramatic departure from previous rules and it greatly limits an investor’s ability to achieve wealth. In simple terms, earning rental income from ten properties will yield more than what would be acquired from four properties. However, it is a moot point because the real estate investor Fannie Mae rules imposed a four property financing limitation. Needless to say, the negative ripple effects of this will have on the economy will be felt for years to come.

It is understandable that Fannie Mae does not want to take unnecessary risks considering how much money it has lost. Most reasonable people realize this. However, the way the rules are set up they are locked in stone and across the entire board. In other words, there are no exceptions to these new real estate investor Fannie Mae rules. No one is distinguished from one another and the rules are blanket policies. For many, such a policy is a bit excessive.

Namely, if someone’s income is too low, it is understandable that such a person should be capped to four properties. Such a person could prove to be a liability under the previous rules of approving upwards of ten mortgages. However, there are those individuals that could easily afford to pay more then four mortgages. Yet, these individuals are restricted to the new real estate investor Fannie Mae rules.

Again, it is understandable that Fannie Mae needs to tighten its lending practices. However, to do so in a manner that restricts investment opportunity is not helpful. Hopefully, these rules will be reversed as the economy improves.

by Susan Lassiter-lyons - October 10, 2009

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Source: http://www.portfolioloanblueprint.com