Fannie Mae Caps Second Home Mortgages At 7 Percent
Fannie Mae's Lender Letter revealed that the company will be imposing a 7% limit on its acquisition of single-family mortgage loans secured by second home and investment properties.
The company made edits to its eligibility policies stating that all second home and investment properties must be written with the Desktop Underwriter, receive an Approve/Eligible recommendation and be delivered as a DU loan in Loan Delivery, according to the letter.
The only exception that will be permitted for second home and investment properties loans is for high LTV refinance loans that are manually underwritten in accordance with the Alternative Qualification Path and delivered with Special Feature Code 840.
"This new limitation will likely open a path to a greater number of Non-QM and private label opportunities," said Rob Chrisman in his latest report.
These policies are effective for whole loans submitted to our Loan Delivery system on or after Apr. 1, 2021, and for loans delivered into MBS pools with issue dates on or after Apr. 1, 2021, according to Fannie's Lender Letter. After this date Loan Delivery will apply a “Fatal” error for loans that do not meet the above requirements.
Click here to learn more about the second home and investment properties cap.
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