» Freddie Mac Makes Real Estate Investment Loans Harder to Get » Posted by Realestator      

In an effort to stop the bleeding, Freddie Mac is punishing the wrong group of people by making Real Estate Investment Loans harder to get.

On April 22, 2008, the lender issued a bulletin announcing tightening restrictions on any loans that take effect after August 8, 2008 for the financing of second-home and investment real estate purchases. In the case of second-home buyers, purchasers who have “individual or joint ownership” interests in multiple properties will be ineligible for new mortgages through Freddie Mac if they have ownership interests in more than four properties securing debt, including the one they propose to finance.

Similarly, investment property loans for rental houses, rental condominiums and other investment properties will be ineligible if the borrower has ownership stakes in a total of four units (previously Freddie Mac allowed investors to own as many as 10 rental properties carrying mortgages).

I have yet to see any figures released on what percentage of real estate investment loans have contributed to the national foreclosure crisis, however, I would wager it is no where near the figure of owner-occupieds. Does Freddie Mac not realize that smart investors wait for real estate markets to go down in value before they buy, and therefore allowing them to buy their foreclosed homes easily is a step in the direction of correcting the mess that their poor lending standards caused in the first place?

Or maybe they are so bitter they don’t want anyone profiting right now if they can’t. By making real estate investment lending harder now, they are only prolonging a horrible situation that needs a better fix than finger pointing or tax credits being issued. Unbeknownst to Freddie Mac, they have not burdened investors so much as legitmate sellers and desperate banks, by limiting options for the one group of people who could “save the day”.

Now, investors and sellers will have to join forces to put together creative real estate investment lending options that do not involve bank paper. Freddie Mac has always been the middle man - and it’s time to cut them out!

For more real estate investing information, visit the realestator’s website at www.real-estate-investing-support.com

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» Posted in Investment Financing on May 10, 2008.

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