One phrase we seem to be hearing a great deal in the media as of late is “the emperor has no clothes.” It’s funny to me that we’re not hearing “the sky is falling” with equal frequency.
According to Realty Times, the illogical restrictions imposed in late summer by Fannie Mae and Freddie Mac to limit the number of rental properties an investor can own on order to obtain new financing may be on their way out.
At the time, Fannie and Freddie believed that the more properties an investor owns, the higher the likelihood of default. So they reduced the maximum allowable number of units per investor from 10 to four.
In my opinion, it isn’t the seasoned investors who defaulted; it’s those who were new and didn’t have proper guidance when they bought their investment property. But panic by one often leads to the irrational thinking of many, so the restrictions were imposed.
Of course, this move only served to bumped many smaller investors out of Fannie and Freddie’s programs, forcing them to pursue hard money lenders or leave the market altogether.
Apparently at the National Association of Realtors convention in Orlando in November, James Lockhart, who runs the Federal Housing Finance Agency, spoke twice. Those in attendance pressed him on the issue. It was effective. In a letter sent to NAR President Charles McMillan, Lockhart shared one of the agencies is re-thinking the move. It seems they’ve realized investors may play an important role in the housing recovery.