Fannie Mae is at it again

Fannie Mae has announced a change in guidelines that will make it more difficult to qualify for a purchase for a new owner occupied property if you are converting you current owner occupied property to a rental or second home.  Fannie’s new guideline are directed at stopping buy and dump problems that have been accruing throughout the nation.  Many people in an attempt to get into a lower priced home in the down market have been buying a new property and then letting their over leveraged home go to foreclosure.  They buy while their credit is still good and then let their home that they bought at the top of the market that is no longer worth what they owe go to foreclosure.  This practice has been reported on by the media and is in my mind fraud.  Fannie has determined the best way to handle this is to change guideline so that someone in this situation who maybe calling their current home a rental property once they move into the new home will have to qualify with both mortgage payments, and have 6 months reserves for both the current mortgage and the proposed mortgage in the bank.  Fannie will not allow rental income to be used to off set the current mortgage unless the property has 30 % equity.  This will cause many problems for honest people trying to move up to a bigger home at a great price in this market.

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