Mortgage financier Freddie Mac sent out a bulletin today detailing a series of upcoming changes to the company’s selling requirements because of continued credit deterioration and declining home prices.
Effective August 1, for second home mortgages, a borrower may not own more than four financed 1-4 unit properties, including the subject property.
For investment property mortgages, a borrower who owns more than one financed non-owner property may not own more than four (was 10) financed 1-4 unit properties, including the subject.
With regard to cash-out refinances, the borrower must own the property for at least six months prior to the note date of the refinance mortgage.
Additionally, when a seller originates a cash-out refinance and holds the mortgage for less than six months, if the mortgage is refinanced as rate and term it will be subject to delivery fees associated with a cash-out refinance.
Freddie Mac said the changes were necessary because of continued credit deterioration and declining property values in much of the nation.
These changes are addition to those announced by Freddie Mac in late February, which will become effective June 1.