Fannie Mae announced March 10 that they are limiting new loans secured by second homes or investment properties to 7% of the overall loans they purchase (roughly HALF their historic levels!), effective April 1. What does this mean to borrowers seeking investment/2nd home mortgages? Turns out, it means A LOT.
While Fannie did not add any new "loan level pricing adjustments" (the fees borrowers pay for various perceived risk factors) in the announcement, many mortgage lenders added (or will soon add) substantial costs to these loans. For example, Penny Mac (who buys large numbers of Fannie/Freddie loans from originating lenders), immediately added a 2.25% cost to new 2nd home mortgages, regardless of equity. The pricing adjustment for a new investment property loan with less than 25% equity rose to a staggering 5% of the loan size ($10,000 on a $200k loan!).
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