Frequently Asked Question: I Was Turned Down for a Mortgage Last Year. Was it in Violation of the Fair Credit Reporting Act (FCRA)?
Q: I was turn down for a loan last year because I was told I already had 4 mortgage loans. I had 3 houses with a 1st mortgage and a house with a second. I was told that Fannie Mae and Freddie Mac set rules and regulations that you can't have more than 4 loans or mortgages. Do these rules and regulations overrule the Fair Credit Reporting Act (FCRA) or all the other Acts passed by Congress?
A: The fact that you were turned down for another mortgage because you had 4 mortgage loans has nothing to do with the Fair Credit Reporting Act (FCRA) or any other law, rule or regulation currently in force. Fannie Mae and Freddie Mac are free to impose whatever requirements they want (so long as they are not in violation of law).
You probably applied for a mortgage at a time when the maximum number of mortgages you could have was more restrictive than it is now. The decision not to grant you another mortgage is based on risk - real or perceived.
Recently, Fannie Mae and Freddie Mac have relaxed their rules and now will allow you to have up to 10 mortgages. However, just because you can have 10 mortgages doesn't mean you'll be approved for 10 mortgages. Among factors that are taken into consideration are income, credit scores, amount of down payment and/or amount of equity in one or more homes, your experience in managing rental properties, and net worth.
If you are still interested in pursuing the purchase and financing of one or more properties, you should speak with a mortgage lender / broker in your area to determine whether or not you are eligible for consideration.
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