SPECIAL SECTION: POLICYAND LEGISLATION
MORTGAGE LIMITS
MYCONCLUSION: IT’S TIME TO REMOVE THE 10-CAP COMPLETELY From my perspective as a turnkey rental property owner and provider, it is time to remove the cap on conventional home loans entirely, provided the borrower is qualified for the loans they seek. As a pop- ulation, investors are far more responsible than homeowners at maintaining their tra- ditional mortgage loans. We should not be penalized for what Fannie Mae acknowl- edged in 2009 when it raised the mortgage limit to 10: “Experienced investors play a key role in the housing recovery.” We also play a key role in the stability, improvement, and productivity of our hous- ing markets. Removing the 10-cap would increase the ability of qualified investors with good track records, solid credit, and
the wherewithal to make appropriately sized down payments, to expand their portfolios. This would not only be good for investors. It would also be good for communities that would find more affordable housing avail- able thanks to a greater investor presence in the long-term investment sector. Alternatively, raise the cap to 20. If Fannie and Freddie are uncom- fortable removing the mortgage limit completely, I believe the cap should be doubled to 20. Given that the extend- ed-mortgage-limit program is already voluntary, no lender would be compelled to make these loans and the few who un- derstand the value of originating conven- tional mortgages to real estate investors could continue to benefit from serving
our sector. Hopefully, as the successes be- came evident, the practice would expand as more lenders followed suit. We must find a way to make the second- ary mortgage market giants understand how eliminating the 10-cap could benefit the entire housing sector as well as inves- tors with large property portfolios. • Marco Santarelli is the founder and president of Norada Real Estate Investments, a national real estate investment firm offering turnkey investment property in growth markets nationwide. He is also a published author and host of "The Passive Real Estate Investing Show," a podcast for real estate investors interested in building substantial passive income and creating long-term wealth. Learn more at NoradaRealEstate.com.
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AMuch-Needed Change in Mortgage Lending Practices IT’S TIME TO CHANGE OR REMOVE THE 10-MORTGAGE LIMIT FOR QUALIFIED INVESTORS.
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by Marco Santarelli
investors making high down payments (sometimes more than 30 percent), showing excellent credit, and providing documented, long-term investment performances in their portfolios to take out these loans. However, since that time, the practice of financing between five and 10 investment properties has remained a niche program. Many lenders either do not participate or seldom approve these loans.
This is not because owning more than 10 properties is illegal, but rather because it is very difficult for lenders to sell those loans on the secondary mortgage market. Prior to 2009, Fannie Mae would not accept loans on investment properties in situations where the owner had more than four properties already financed. After the housing crash, Fannie Mae adjusted those regulations to permit
The opinions stated in this article are solely those of the author. Make your voice heard on this topic on the Think Realty forums at ThinkRealty.com/tr-forums.
T
he Issue: In nearly all cases, investors cannot finance more
than 10 properties (including their primary residence) simultaneously using conventional mortgage financing.
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36 | think realty magazine :: november 2018
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