With the government reporting that new home sales crashed to an annualized rate of 331,000 in December 2008, the lowest rate since record keeping began in 1963, it’s not surprising that new opportunities are springing up for investors. Whereas homebuyers may be concerned that they won’t have a job or be able to make payments on a house, investors have to buy real estate in order to have a job.

So, FHA announced that it will provide more long-term multi-family mortgage money for a window of at least 6 months. It is temporarily suspending its ban against insuring loans on apartment properties that haven’t been completed and operating for at least three years. That means investors can get FHA-insured financing on buildings with five or more rental units even if the property was built or substantially rehabilitated within the past year or two.  Since FHA financing often is much less costly than other mortgage sources and offers fixed rate terms up to 35 years this is very good news.

There are a lot of requirements, however. Read them before making any offers.

In the new administration’s foreclosure prevention plan that was signed this week banks will have to calculate whether to foreclose or whether to allow distressed borrowers to modify thier mortgage loans. Modifying mortgages requires a lot of new paperwork, which means mortgage servicing companies must be paid to produce new loan docs. The plan provides for payment of mortgage servicers over a 5-year period on each new loan. The costs of loan modification must be weighed against the costs of foreclosure, and of course both may eventually default if the borrower fails to pay. Only owner -occupied mortgages quality for loan modification. Specific debt-to-income  and loan-to-value ratios for borrower qualification will be released on March 4, 2009.

It’s true, it’s official, Fannie Mae now welcomes real estate investors who own 5-10 properties, and will provide financing, provided that all of the following guidelines are met:

• 25 percent down payment on the investment property;
• Minimum credit score of 720;
• No mortgage payments late within the last 12 months;
• No bankruptcies or foreclosures in the last seven years;
• Two years of tax returns showing rental income from all rental properties;
• Six months of principal, interest, taxes and insurance reserves on each of the financed properties.

So the many, many investors who were closed out by the 1-4 properties rule in the past are now eligible. But Fannie Mae will also require all real estate investors to sign a form granting lenders permission to verify supplied tax returns against the official, IRS-filed version. The form that’s used is called a 4506-T.  Watch for it.

Today the Senate voted to give home buyers up to $15,000 as a tax credit (10 percent of the cost of the house up to $15,000) for purchasing any house. Existing legislation has provided up to $7,500 on new construction for first-time homebuyers only. 

Sen. Johnny Isakson, R-Ga., introduced the bill intended to help more buyers and revive the gasping housing industry, at an estimated cost of $19 billion. We will be waiting several days as the House works through its version of the bill.