Author Topic: Agency Investment and Second Home lending changes.  (Read 3416 times)

0 Members and 1 Guest are viewing this topic.

Offline Soylent Green Is People

  • Abiding Dude.
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 1153
  • -Received: 1307
  • Posts: 2834
  • Isaiah 58: 6-11
Agency Investment and Second Home lending changes.
« on: March 11, 2021, 10:44:10 AM »
FNMA released information today ( Lender Letter 2021-08 ) of great impact to non-owner occupied AND second home lending. The Agencies are expected to push back the amount of investment/second home loans they will buy to 7 percent of their portfolio.

http://www.mortgagenewsdaily.com/03112021_loan_underwriting.asp


Some lenders have pulled their non-owner lending products so as to not get caught holding unsellable mortgages. Investment and 2nd home loan rates are expected to run past 5 percent in the coming days for Conforming Conventional loans.  More to follow.


« Last Edit: March 11, 2021, 11:16:18 AM by Soylent Green Is People »
My .02c

SGIP

Offline Cares

  • Real Estate Broker & Mortgage Loan Originator
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 14
  • -Received: 266
  • Posts: 1380
Re: Agency Investment and Second Home lending changes.
« Reply #1 on: March 11, 2021, 02:20:19 PM »
Some lenders are adding LLPA of 3 to 5 points on investment and second home loans

The following member(s) thanked this post:


Offline Soylent Green Is People

  • Abiding Dude.
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 1153
  • -Received: 1307
  • Posts: 2834
  • Isaiah 58: 6-11
Re: Agency Investment and Second Home lending changes.
« Reply #2 on: March 11, 2021, 03:47:19 PM »
YOW! You can't raise the rate high enough to absorb that fee amount. Best you might do is a 5 handle rate with 2-3 points. 

It's now either Jumbo/non-QM/or $$$$ for an Agency loan.

This isn't just impacting onesie-twosie rental properties, nor the big 2nd home market in desert / beach communities, but also 2-4 unit purchases. Most Jumbo lenders will be OK with a SFR rental, but 2-4 units are radioactive to many in the jumbo lending world. 

IMHO what this move is telegraphing is this: Cnce the eviction rules are deemed unconstitutional (unreasonable seizure), there may soon thereafter be a great offloading of rental property by landlords tired of the fight and economic drain. A great number of new investor buyers will line up to purchase these rental units, but the Agencies are trying to force these sales into becoming primary residences not rental units by starving the market of financing.

If this this the case, soon we will see the real world application of Dr. Ian Malcolm's dictum: "Life, uh, finds a way" and other methods of buying rental or 2nd homes will arise
« Last Edit: March 11, 2021, 03:54:10 PM by Soylent Green Is People »
My .02c

SGIP

The following member(s) thanked this post:


Offline Cares

  • Real Estate Broker & Mortgage Loan Originator
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 14
  • -Received: 266
  • Posts: 1380
Re: Agency Investment and Second Home lending changes.
« Reply #3 on: March 11, 2021, 03:58:57 PM »
I think that's pretty spot on. They are trying to force more transactions to be primary residence. Not all lenders have implemented an LLPA yet but I bet you they are analyzing their portfolio mix to make sure they stay under the 7%.

Pennymac is one of the early ones but I bet others are following suit.
https://www.gopennymac.com/announcements/announcement-21-18

Good luck getting an investment property with 25% down now. Your rate will be sky high and/or you're paying many points to obtain the loan. We're talking to the tune of tens of thousands in points.
« Last Edit: March 11, 2021, 04:05:36 PM by Cares »

Offline Soylent Green Is People

  • Abiding Dude.
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 1153
  • -Received: 1307
  • Posts: 2834
  • Isaiah 58: 6-11
Re: Agency Investment and Second Home lending changes.
« Reply #4 on: March 11, 2021, 04:17:09 PM »
The jumbo lenders will be in the 4's with reasonable costs... for now. As said by another, " a rising tide lifts all boats". If the rental or 2nd home market will bear a 4.x handle rate with 1-2 points Jumbo versus a Conforming rate at 5.x with 3.0 points, expect fees to rise.

This change is going to crush financed sales in areas like Palm Desert and Vegas. Cash will be king! 
My .02c

SGIP

Offline Cares

  • Real Estate Broker & Mortgage Loan Originator
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 14
  • -Received: 266
  • Posts: 1380
Re: Agency Investment and Second Home lending changes.
« Reply #5 on: March 11, 2021, 05:34:08 PM »
My main lender just announced 5 point adjustment for investment properties and 2.5 point adjustment for secondary homes. This will absolutely crush "new" real estate investors and greatly benefit cash investors.

Offline USCTrojanCPA

  • Your CPA Realtor
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2974
  • -Received: 2316
  • Posts: 11382
  • Gender: Male
Re: Agency Investment and Second Home lending changes.
« Reply #6 on: March 11, 2021, 08:17:00 PM »
Wow, what a change. So direct jumbo lenders will jack up the rates on 2nd homes as well?
Martin Mania, CPA
AgencyOne
CA DRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!
Have license, will travel!

Offline Cares

  • Real Estate Broker & Mortgage Loan Originator
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 14
  • -Received: 266
  • Posts: 1380
Re: Agency Investment and Second Home lending changes.
« Reply #7 on: March 11, 2021, 08:20:27 PM »
Wow, what a change. So direct jumbo lenders will jack up the rates on 2nd homes as well?

They are leaving money on the table if they don't so I assume they will.

Offline OCLuvr

  • O.C. Resident
  • ***
  • Thanks
  • -Given: 23
  • -Received: 40
  • Posts: 530
Re: Agency Investment and Second Home lending changes.
« Reply #8 on: March 11, 2021, 08:25:32 PM »
Won’t this kill real estate appreciation?

Offline USCTrojanCPA

  • Your CPA Realtor
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2974
  • -Received: 2316
  • Posts: 11382
  • Gender: Male
Re: Agency Investment and Second Home lending changes.
« Reply #9 on: March 11, 2021, 11:03:34 PM »
Won’t this kill real estate appreciation?

It'll definitely take out many investors who are financing 75% of the purchase but the vast majority are primary resudence buyers so it will decrease the amount of bidders on a home somewhat.
Martin Mania, CPA
AgencyOne
CA DRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!
Have license, will travel!

Offline Cares

  • Real Estate Broker & Mortgage Loan Originator
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 14
  • -Received: 266
  • Posts: 1380
Re: Agency Investment and Second Home lending changes.
« Reply #10 on: March 11, 2021, 11:17:04 PM »
I think it's premature to make predictions as to what will happen but my thoughts are that the cash investor is going to have an easier time outbidding the traditional 20% or less primary home buyer.

Offline USCTrojanCPA

  • Your CPA Realtor
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2974
  • -Received: 2316
  • Posts: 11382
  • Gender: Male
Re: Agency Investment and Second Home lending changes.
« Reply #11 on: March 12, 2021, 09:32:49 AM »
I think it's premature to make predictions as to what will happen but my thoughts are that the cash investor is going to have an easier time outbidding the traditional 20% or less primary home buyer.

Only if they bid at least within 1% of the highest strong finance buyers.  I've had cash buyers not get homes because they got outbid by financed buyers by 1%+.
Martin Mania, CPA
AgencyOne
CA DRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!
Have license, will travel!

Offline Soylent Green Is People

  • Abiding Dude.
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 1153
  • -Received: 1307
  • Posts: 2834
  • Isaiah 58: 6-11
Re: Agency Investment and Second Home lending changes.
« Reply #12 on: March 12, 2021, 10:58:14 AM »
A good post resource on percentage of monthly mortgage applications that are 2nd home or Non-Owner - 10.1 percent at present, needing to be reduced to 7%. A 3% difference is relatively small however when 100b per month is being funded, that's a very big number of borrowers being impacted.

https://www.calculatedriskblog.com/2021/03/mba-share-of-second-home-and-investor.html
My .02c

SGIP

Offline USCTrojanCPA

  • Your CPA Realtor
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2974
  • -Received: 2316
  • Posts: 11382
  • Gender: Male
Re: Agency Investment and Second Home lending changes.
« Reply #13 on: March 12, 2021, 11:16:09 AM »
A good post resource on percentage of monthly mortgage applications that are 2nd home or Non-Owner - 10.1 percent at present, needing to be reduced to 7%. A 3% difference is relatively small however when 100b per month is being funded, that's a very big number of borrowers being impacted.

https://www.calculatedriskblog.com/2021/03/mba-share-of-second-home-and-investor.html


I get what the Feds are trying to do, let the little guys primary residences so they don't have to compete with 2nd home buyers and investors as much.
Martin Mania, CPA
AgencyOne
CA DRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!
Have license, will travel!

Offline Cornflakes

  • O.C. Resident
  • ***
  • Thanks
  • -Given: 3
  • -Received: 95
  • Posts: 547
Re: Agency Investment and Second Home lending changes.
« Reply #14 on: March 14, 2021, 08:10:52 PM »
So, less investment home and more Primary home purchases on the way? Meaning fewer rentals coming in the market and rents going up?

Joe will have little bit of ease buying home as some competition is removed. Jane will have to part with few more $ every month in rent?

 

Talk Irvine Links

[Recent Posts]
[FAQ / Rules]

Site Supporters


SimplePortal 2.3.7 © 2008-2022, SimplePortal