Here is some more credit squeezing news. On August 8th of this year Freddie Mac is clamping down on invertor loans. The limit for multiple owner investment units will be a total of four vs. the ten they currently allow. Cash out refis on rental units will also be eyeballed closely with a high probability of higher interest rates.

An even larger looming problem is the PMI or private mortgage insurance issue. PMI is required when a downpayment is less than 20% of the total purchase price. Investor loans in declining or depressed markets will be completely out of luck, in other words, no PMI, no loan if less than a 20% downpayment. Shades of the 1980's! When I first started selling homes on the mountain we could not sell anything without at least 20% down because the lenders would not provide PMI for buyers in our area.

What does this mean as a buyer or seller in the markets of Government Camp, Rhododendron and Welches? So far we have not been declared a "distressed" or "declining" market for real estate sales so we have dodged that bullet. What it does mean is that there will be a shrinking pool of investment purchasers with credit restrictions and the probability of higher interest rates on those loans.