Just when ya think ‘they’ can’t come up with any more ways to retard any chance of a credible real estate recovery, the goobers at Freddie Mac steps up to the plate. They’ve decided, no kiddin’, to require new investors to prove they have a couple years experience in property management — or no loan. Huh? What? Am I on Candid Camera? Is Ashton Kutcher filmin’ this? Will someone from Freddie Mac jump outa da shadows shoutin’ to real estate investors ‘You’ve been punked!’? Duh doesn’t even begin to cover this silly policy.
This comes on the heels of the former title holder’s most recent effort for nonsensical policy changes, Fannie Mae. To jar your memory, they recently said if, in the loan qualification process, you own income property for less than two years, they’ll count the payments against you, but won’t apply the property’s income to your favor. Another head scratcher.
BawldGuy Axiom: Draining a flooded basement is hindered when the pump is turned off while the water keeps pourin’ in.
The takeaway here is simple: If you’re on the fence, jump off now. Your loan app must be dated before December 14th, or the new rule will apply. If you’re an experienced investor, you’re probably OK, but ya never know ’till the ink dries on the grant deed. Know what I mean, Verne?
Call me with any questions, or to get something goin’. 619 889-7100. Have a good one.
Related posts:
- Filed Under — You Can’t Make This Stuff Up OR You Know What You Know
- Filed Under — You Can’t Make This Stuff Up
- It Takes Both Sides — If They Don’t Want You Any More — Why Make Yer Own Samiches?
- The Difference a Lender Can Make — Real Estate Investment Savvy
- A Real Estate Investor Asked What Might Make Us Pass On A Potential New Region?
About BawldGuy
Why is the government, i.e., the taxpayer, i.e. you and I, involved in making loans to investors at all? Was that ever the charter of Freddie Mac? Isn’t this the domain of the private market?
I’m tired of competing for investment properties with people with insufficient funds that are allowed to compete by virtue of my own money.
I want to pay the lowest possible prices for investment properties don’t you? Do you still think Helicopter Ben is a positive long term force? These guys have given us the recoveryless recovery and for lack of any better performing assets I have to sit in foreign currency and as Max has recommended, lumps of yellow metal. It’s depressing really.
OK, rant over.
Hey Sean — Always feel free to rant.
If the White House/Congress were both supply-siders, Ben would now be a hero. I’m withholding judgment ’till the dust settles.
Investors, many of them private, buy loans in packages, including investor loans from Fannie & Freddie.
Though your point about insufficient funds is salient, it’s a couple years or so late. The qualifications are now more stringent than I’ve seen in all my 40 years — no debate. When the investor buys an income property for less than $250K, and has roughly $55-60K of his own skin in the game, he’d balk at the phrase ‘insufficient funds’. That figure doesn’t count the massive reserves he has for backup.
Depressing? I’m smilin’, but I’m rowing that boat sittin’ right next to ya.
Sean, with all due respect there is not one person out there buying investment property without sufficient fund.
In fact, there are investors out there that cannot get a decent loan but could pay cash for a property…if that made any sense to do so.
Freddie/Fannie are so far removed from the realities of the market it’s getting commical. Just the other day I had someone comment on my Freddie/Fannie rant saying that Fannie wanted them to sign a doc saying they knew the property was selling for $15K over appraisal but that the buyer had to accept this and pay in the $15K to make the loan salient.
I mean, talk about detached.
Frankly, Chris, I suspect Rod Serling is the Shadow CEO of both agencies — and he’s havin’ great fun creating new episodes. Just wish we weren’t part of the cast.
I just DID pay cash for a property because I can no longer qualify for the financing I have used successfully for years. Make that decades. I could have made 25 percent down payments on two more expensive properties and banked the remainder as reserves in normal times. Folks, leverage is “market clearing” because it gets strong investors into the game.
Of course, in “normal” times, I could not have bought the properties at these prices. Investors would have already sucked up the excess inventory and we would be much closer to a supply and demand balance. And unless one of you financing geniuses can come up with some leverage, I’m going to buy another one for cash at the beginning of the year.
Good for you!!
You must be kidding, right?!?!?! This is yet another, “what are you stupid!” move by the geniuses that we elect (and the ones they nominate).
WOW!
Hey Josh, good to see ya here.
We’ve seen so much of this irrational non-think, I think we’re becoming almost immune to stoopid.
Gotta think some of the superb writers you have over at Bigger Pockets would have much to say about this.
Don’t be a stranger, OK?
I got to the blog every few days . . . I definitely need to get better with dropping my thoughts/notes, though.
As you and I’ve spoken about before, I don’t think we’ll see it end anytime soon.
Want to swing by with a guest post with more details/thoughts on the subject? It would be great to have you and your slant on things over at BP.
Thoughts?
I’d love to. I’m away tomorrow takin’ care of family business outa town. why don’t you email me? I’d be happy to write my thoughts and send ‘em to you.