Posted by JohnE-CA on January 11, 2003 at 17:27:59:
Hi Dave,
Maybe this article will help. The title is “Rent Loss Coverage”
www.realtytimes.com/rtnews/rtcpages/20030110_rentloss.htm
JohnE
New Conforming Loan income insurance?? - Posted by Dave T
Posted by Dave T on January 10, 2003 at 23:57:04:
I got an interesting bit of information from the loan officer at my bank today. It seems that there are fairly new conforming loan guidelines in place that require someone (like me) with quite a few rental properties to have rental loss insurance for six months of lost income before I can get my tenth investor mortgage.
Anyone heard of anything like this? If so, could you give me a reference to a FNMA source for this requirement that I can look up?
Re: New Conforming Loan income insurance?? - Posted by GMann
Posted by GMann on January 11, 2003 at 12:34:33:
The only insurance I am aware of is homeowners/hazard insurance. It sounds to me like you should make a call to the state’s banking and/or insurance dept.
There has been a lot of law suits about forcing or hard selling insurance products for borrowers.
Re: New Conforming Loan income insurance?? - Posted by Dave T
Posted by Dave T on January 11, 2003 at 13:51:21:
Here is the relevent section from the standard underwriting guidelines when a FNMA or FHLMC loan is used to purchase investment property.
“If rental income is used to qualify, Rent Loss Insurance in the amount of 6 months gross rent is required. If rental income is not used to qualify, PITI and operating expenses of the subject property are required to calculate debt payment to income ratio.”
My question now is how is this guideline is applied? Does it apply only to the subject property, or to all current investment properties when rental income from those properties is used in calculating the ratios.