REIS Loan Programs 
​Comparison to Fannie Mae Investor Programs​

This section will deal with the major differences between the Fannie Mae Investor guidelines as compared to the product line offered by Real Estate Investor Services, LLC. for long term financing.   For the seasoned investor the REIS products could be perfect to help the professional Investor accumulate more properties without the need to stockpile massive amounts of idle reserves just to satisfy the outrageous Fannie Mae requirements.   

Reserves

Case Study

The Investor is looking to purchase his 10th Investor property.  He selected a 2 bedroom 1 bath rental unit with positive cash flow and a DSCR of 1.30.  The agreed on purchase price with the seller is $200,000.  The Buyer has the 25% down payment, a total of $50,000 and a credit score over 700.  The DTI may be a problem, but he is more concerned with the required reserves.  Let's check out the two choices.  The other 9 units are of equal value with equal loan amounts, a total of $1,500,000.

REIS

A loan of $150,000 at 7% has a payment of $997.00, plus taxes of 166.00 per month and 100.00 for insurance.  Our estimated required reserve would be around $1,243.00. 

​Fannie Mae

The Fannie Mae Guidelines has determined that Investors financing and additional 7th throuh 10th properties increases the risk of foreclosure should markets suddenly change.  For this reason reserve requirements increase of 6% of the aggregate loan balances of the 10 properties.  Therefore, the required reserve balance of 6% for the aggregate loan balance of $1,500,000 would amount to $90,000.  For many investors this becomes the deal breaker.

Cash Out

Fannie Mae

Cash out eligibility:  Owned property for over 6 months

REIS

Cash out eligibility:  Owned property for over 30 days​

Income Documentation

Fannie Mae

Income documentation is what you would expect: W2's, pay stubs, 2 years of tax returns for individual and business, if applicable, and  a 4506-T verification.

REIS

REIS is similar to a Stated Income product.  We focus on the property value, Buyer reserves, credit score, appraisal, rent statistics and the DSCR calculation.  This is why we target a close within 21 days.

Credit Bureaus

Fannie Mae

Fannie Mae will submit all loan balances and report all  monthly payment activity to the three credit bureaus.  Initially the addition of new credit will reduce your credit score.  The revealing of this information could also make it more difficult to obtain additional financing for real estate or other purposes.

REIS

We do not post property loan and payment data to credit bureaus.  This makes it easier for Investors to find additional sources of funds.

DTI 

Fannie Mae

​Borrowers must have a maximum DTI of 45% if they have 12 months of financial reserves. Borrowers must have a maximum DTI of 36% if they have 6 months of financial reserves.  DTI levels will have an affect on your interest rate.

REIS

We do not calculated DTI ratios.  One less problem to deal with.

Qualifying Rate

Fannie Mae

As of Jan. 10, 2018 the 30 year rate was 4.0%, the 7/1 ARM was 3.25% with a 5% life time cap.  What does all that mean?  On a $200,000 loan your 30 Fixed rate payment would be $954.83 and the ARM would be $870.41 a month.  However, for qualifying purpose and DTI calculations the ARM rate is 3.25% plus the 5.0% cap.  That calculated payment is $1,502.53.  This would be the number used to calculate your DTI.

A 7/1 ARM means that you have the payment of $870.41 for 7 yeas and then it could adjust annually to a level that is determined by the one year LIBOR plus the stated margin.  It could not go higher than the 8.25% and is not a baloon product.

REIS

We don't have a qualifying rate.  We use the our published rate, insurance amount, real estate taxes, HOA fees and retal income.  With these numbers we calculate the DSCR.  It is that simple.  To repeat, we have no DTI.

Property Limits

Fannie Mae

Fannie Mae limit is 10 Investor Properties.  Once over 5 properties it becomes more difficult to find a lender that will approve the loan.

REIS

There are no Investment Property Limits.  Each loan stands on its own merit.

Loan Products

REIS

Fixed Rates: 30 Year Fixed
Adjustable Rate Mortgages (ARMs): 7/1, 3/1

Fannie Mae

​Fixed Rates: 30, 20, 15 & 10 Year Fixed
Adjustable Rate Mortgages (ARMs): 3/1, 5/1, 7/1 & 10/1

Source and Season 

Fannie Mae

Fannie Mae Lenders will typically look at your last 2 months of bank statements for any unusually large deposits.  They are looking for something that could be a loan.  Often Loans are okay, but the monthly loan payment needs to be included in the DTI analysis.  The 2 month lag time should give the credit bureaus time to reflect the loan on the borrower's credit report.  To avoid any questions it is best to get the funds into the bank account prior to the two monthly bank statement.

REIS

REIS does not source or season funds.  We do ask for a current electronic copy of your bank account to verify funds needed to close and the required reserves.  Even if loans show up on your most recent credit report it would not affect the loan process since we do not calculate DTI ratios.

Tax returns and IRS 4506-T

Fannie Mae

​​4506T must be processed to cover the years of income documentation in the loan file, generally two years.

REIS

REIS does not require Tax Returns and therefore will not require a 4506-T verification from the IRS.  

VOE

Fannie Mae

When I was a Licensed Loan Officer I would often obtain a written Verification of Employment from the Employer.  For most Lenders it is often standard procedure to call the Employer and ask if the Borrower is still employed there and if they expect the employment to continue.  There are times we did not get the response we were hoping to hear.  Weeks of work just blew up in one brief moment.

REIS

Because we offer a Stated Income Product we do not perform a Verification Of Employment.  

PMI

Private mortgage insurance is charged on all loans over 80%.  They are strictly for owner occupied residential loans.  Investor loans require 20%-25% down for this reason.  In the old days when we were writing 100% sub-prime loans we would do what we called a "piggy back 80/20" loan, a 1st for 80% to avoid the PMI and a higher rate 2nd for the remaining 20%.

Rent Loss Insurance

Fannie Mae

Investors may be required to obtain a Rent Loss insurance policy to cover 6 months worth of lost rental income.

REIS

Not a requirement.

2 Years of Landlord Experience

Fannie Mae requires 2 years of Landlord experience to be able to include rental income in the DTI analysis.