Lending Guidelines Have loosened.... or have they?

Here are some updates currently with Fannie Mae conventional financing:

- FNMA has removed the higher down payment or equity requirements for high balance loans. For those of us in higher priced markets where the high balance limit is higher than 424,100, we used to be subject to higher down payments and now the loan limits for the HB or higher balance loans are now the same as the 424,100 or lower LTV limits. This was not always so 

- FNMA's calculation of reserves is no longer 6 months PITIA (principal/int/taxes/insurance/assessments) when it comes to more than 4 financed properties. They adjusted their calculation to a system based on the un paid balance or UPB of your total loan portfolio in excluding your primary residence. How it work is a borrower will need from 2-6% of their UPB in reserves when they have from 2-10 financed properties, the more financed properties the more reserve percentage that is required on all oustanding mortgages in excluding the primary. This in effect is much less than the prior 6 months PITIA that used to be required per property when a borrower was above 4 fin props, plus this is not required on the primary

- no more continuity of obligation (COB) rules which required a borrower to be obligated on the debt prior to a title transfer to be able to finance a new loan through fannie mae. Since these rules have been removed it is now easier to finance properties using fannie mae as the conventional lending source when new title transfers occur where the underlying note being paid off is not being obligated by the current title holder.

Let me know if you have any questions on how these updates play out or how they may affect your specific scenario when investing in RE or just doing a loan in general.