A Property Sales Report is a document that details information about a specific property. This…
Investment Property Rule Change!
Fannie and Freddie are limiting the number of second home and investment properties they have in their portfolios. That means in markets like Colorado Springs you are likely to see a calming of the housing price boom as investment properties and costs associated with getting an investment property will be going up!
“Combined, Fannie Mae and Freddie Mac purchase about 66% of all mortgages in the U.S. Now that the companies will be buying fewer second home and investment mortgages, it will be harder for lenders to resell the loans on the secondary mortgage market.
With fewer buyers, lenders will be taking on more risk in originating these types of loans. To compensate for the increased risk, mortgage lenders will likely increase rates.
According to Mortgage News Daily, Penny Mac—a lender not connected to Fannie or Freddie—“immediately added a 2.25% cost to new second home mortgages, regardless of equity.” It is likely other lenders will follow suit.
In addition to higher fees, the move will likely negatively impact housing prices in communities where a high percentage of homes are owned by investors or are second homes. When mortgages become more expensive—which will likely happen due to this case—it puts negative pressure on property prices.
In time, it’s possible that a new buyer of these loans will emerge and costs for these mortgages will decline once again. But in the meantime, investors and second-home owners are facing the prospect of much higher fees for a mortgage.”*
* – FHFA Changes Investment Properties, Biggerpockets Blog