The following table describes the limits that apply to the number of financed properties a borrower may have.
|Subject Property Occupancy||Transaction||Maximum Number of Financed Properties|
|Principle residence||Transactions other than HomeReady loans||No limit|
|Principle residence||HomeReady loans||DU and manually underwritten - 2|
|Second homeInvestment property||All||DU - 10, Manually underwritten - 6|
The number of financed properties calculation includes:
the number of one- to four-unit residential properties where the borrower is personally obligated on the mortgage(s), even if the monthly housing expense is excluded from the borrower’s DTI in accordance with B3-6-05, Monthly Debt Obligations
the total number of properties financed, not to the number of mortgages on the property or the number of mortgages sold to Fannie Mae (a multiple unit property counts as one property, such as a two-unit);
the borrower’s principal residence if it is financed; and
the cumulative total for all borrowers (though jointly financed properties are only counted once). For HomeReady loans, financed properties owned by a non-occupant co-borrower that are owned separately from the borrower are excluded from the number of financed properties calculation.
The following property types are not subject to these limitations, even if the borrower is personally obligated on a mortgage on the property:
commercial real estate,
multifamily property consisting of more than four units,
ownership in a timeshare,
ownership of a vacant lot (residential or commercial), or
ownership of a manufactured home on a leasehold estate not titled as real property (chattel lien on the home).
Examples — Counting Financed Properties
A HomeReady borrower is purchasing a principle residence and is obligated on a mortgage securing an investment property. A non-occupant co-borrower is solely obligated on mortgages securing three investment properties. In this instance, the transaction is eligible for HomeReady, as the occupant borrower will have two financed properties. The non-occupant co-borrower’s financed properties are not included in the property count.
The borrower is personally obligated on mortgages securing two investment properties and the co-borrower is personally obligated on mortgages securing three other investment properties, and they are jointly obligated on their principal residence mortgage. The borrower is refinancing the mortgage on one of the two investment properties. Thus, the borrowers have six financed properties.
The borrower and co-borrower are purchasing an investment property and they are already jointly obligated on the mortgages securing five other investment properties. In addition, they each own their own principal residence and are personally obligated on the mortgages. The new property being purchased is considered the borrowers' eighth financed property.
The borrower is purchasing a second home and is personally obligated on his or her principal residence mortgage. Additionally, the borrower owns four two-unit investment properties that are financed in the name of a limited liability company (LLC) of which he or she has a 50% ownership. Because the borrower is not personally obligated on the mortgages securing the investment properties, they are not included in the property count and the result is only two financed properties.
The borrower is purchasing and financing two investment properties simultaneously. The borrower does not have a mortgage lien against his or her principal residence but does have a financed second home and is personally obligated on the mortgage, two existing financed investment properties and is personally obligated on both mortgages, and a financed building lot. In this instance, the borrower will have five financed properties because the financed building lot is not included in the property count.
Additional reserve requirements apply to second home and investment properties based on the number of financed properties the borrower will have. The borrower must have sufficient assets to close after meeting the minimum reserve requirements. See B3-4.1-01, Minimum Reserve Requirements, for the financed properties requirements. The additional reserve requirements do not apply to HomeReady transactions.
If the borrower is financing a second home or investment property that is underwritten through DU and the borrower will have one to six financed properties, Fannie Mae’s standard eligibility policies apply (for example, LTV ratios and minimum credit scores). If the borrower will have seven to ten financed properties, the mortgage loan must have a minimum representative credit score of 720; all other standard eligibility policies apply.
DU will determine the number of financed properties for the loan casefile based on the following approach:
If the Number of Financed Properties field is completed, DU will use that as the number of financed properties. The lender must complete this field with the number of financed one- to four-unit residential properties (including the subject transaction) for which the borrower(s) are personally obligated.
If the Number of Financed Properties field is not provided, DU will use the number of residential properties in the Real Estate Owned (REO) section that include a mortgage payment, or that are associated with a mortgage or HELOC in the liabilities section of the loan application, as the number of financed properties.
If the Number of Financed Properties field and the REO information was not provided, DU will use the number of mortgages and HELOCs disclosed in the liabilities section of the loan application as the number of financed properties.
When none of the information above is provided on the loan application, DU will use the number of mortgages and HELOCs disclosed on the credit report as the number of financed properties.
Note: In order to account for the subject property, DU will add “1” to the number of financed properties on purchase and construction transactions when the REO section, number of mortgages on the application, or number of mortgages on the credit report are used as the number of financed properties.
After determining the number of financed properties, DU will use that value to assess the eligibility of the loan, including the minimum credit score requirement for seven to ten financed properties, the minimum required reserves the lender must verify, and eligibility for HomeReady transactions.
DU will issue a message informing the lender of the number of financed properties that DU used and where that information was obtained (Number of Financed Properties field, REO section, number of mortgages on application, or number of mortgages on credit report). If DU used the information provided in the Number of Financed Properties field or in the REO section as the number of financed properties, and that information is inaccurate, the lender must update the data and resubmit the loan casefile to DU. If DU used the number of mortgages and HELOCs on the loan application or credit report as the number of financed properties, and that number is inaccurate, the lender must provide the correct number in the Number of Financed Properties field, or complete the Real Estate Owned section of the loan application and resubmit the loan casefile to DU.
High LTV refinance loans, DU Refi Plus, and Refi Plus mortgage loans are exempt from the multiple financed property policies. See B5-5.2-02, DU Refi Plus and Refi Plus Underwriting Considerations, for additional information.
The table below provides references to the Announcements that have been issued that are related to this topic.
|Announcement SEL-2019-03||April 03, 2019|
|Announcement SEL-2017-09||October 31, 2017|
|Announcement SEL-2016–03||March 29, 2016|
|Announcement SEL-2015–10||September 29, 2015|
|Announcement SEL-2015–02||February 24, 2015|
|Announcement SEL-2015–01||January 27, 2015|
|Announcement SEL-2014–13||November 10, 2014|
|Announcement SEL-2014–07||June 24, 2014|
|Announcement SEL-2014–06||May 27, 2014|
|Announcement SEL-2012-13||November 13, 2012|
|Announcement SEL-2012–07||August 21, 2012|
|Announcement SEL-2012–06||June 26, 2012|
|Announcement SEL-2012–04||May 15, 2012|
|Announcement SEL-2011–13||December 20, 2011|
|Announcement SEL-2011–09||August 30, 2011|
|Announcement SEL-2011–05||June 28, 2011|
|Announcement SEL-2010–06||April 30, 2010|
|Announcement SEL-2010–02||March 2, 2010|
|Announcement 09-02||February 6, 2009|
|Announcement 08-35||December 18, 2008|