Fannie Eases Investor Financing Rules

Fannie Mae is loosening a restriction to encourage lending to real estate investors, a group that has been widely blamed for contributing to the housing meltdown but is also seen by many as critical to a recovery. The government-sponsored enterprise told lenders last week that starting next month it will buy or guarantee home loans made to borrowers that have mortgaged as many as nine other properties. Currently, Fannie will not touch a loan if the borrower has financed more than three other homes. The change is meant "to bring added liquidity to the investor segment of the market and help hasten the recovery," Fannie said. However, the GSE, which said it wants to make more loans available to "high-credit quality, bona fide ... experienced investors," is tightening other requirements for this type of borrower. Starting in June, an investor will have to hold six months of payments in reserve, rather than two months, to get a single-family loan approved by Fannie's automated system.