A Glimpse into Fannie Mae’s New Rules

Several years ago, there were not many people who knew about Fannie Mae. In fact, to many it sounded more like a “who” than a “what”.  However, today most of us know Fannie Mae as the Federal National Mortgage Association and the mortgage lending giant in the United States. Unfortunately, the reason most of us know about Fannie Mae is because of what’s happened in recent years. Fannie Mae’s less-than-perfect business practices played a large role in the near collapse of our economy. Although Fannie Mae was granted a federal bailout, the lending road has been a rocky one ever since. Fannie Mae’s rules have changed, and not exactly for the better.

One of the most noteworthy changes to the rules is the limit Fannie Mae placed on the number of financed properties one can have. Now one can only acquire a total of four properties. Considering the previous rules that were in place, this change is quite significant. In fact, it places a burden on investors because it radically inhibits their potential to attain wealth. Basically, an investor would make more money on eight properties than they would on only four properties. Nevertheless, Fannie Mae’s new rules have stipulated a limit on financing any more than four properties. This decision will continue to affect our economy from here on out.

Now, most people realize that Fannie Mae needed to make drastic changes in order to prevent something from happening again. As a result, they are not taking any unnecessary risks, which is why the rules are pretty much set in stone. This means there will be no exceptions to the new Fannie Mae rules whatsoever. And, these rules apply to everyone so not one person is exempt from them.

However, it’s important to note that this new rule isn’t entirely unreasonable. For example, the cap at four properties for someone with very low income is a good idea. Someone like this would be a potential liability under the old rules. But for those who can afford the obligation of more than four mortgages, this new Fannie Mae rule proves to be very restricting.

That being said, one can sympathize with Fannie Mae and why they decided to implement these new rules. However, this doesn’t make things easy for investors. Let’s hope these new rules and regulations subside as our economy begins to recover.

Tags: 4 property rule, fannie mae