Director of the FHFA Sandra Thompson (FHFA, iStock)

Good news for second home buyers: Some federal lending restrictions have been lifted, making it easier to get a mortgage for these properties.

In an effort to boost housing supply, the Treasury Department and the Federal Housing Finance Agency are removing some rules that limited the number of loans Fannie Mae and Freddie Mac could purchase, Wire Housing reported.

The restrictions, which were added to the preferred share purchase agreements in January, have prevented Fannie Mae from acquiring loans secured by second homes and investment property. Lenders are more reluctant to give loans that cannot be sold to Fannie and Freddie, and loans prohibited to government-sponsored entities are generally more expensive for borrowers.

As part of the January change, only 7% of the agency’s total single-family home acquisitions could come from loans secured by second homes and investment properties. Other restrictions included those on high-risk loans and access to the cash desks of small lenders.

With house prices on the rise and few homes on the market, removing these restrictions is one way to promote sustainable homeownership, the Treasury Department said in a statement.

“The administration is focused on promoting housing stability, which includes promoting housing policies that can sustainably increase the stock of affordable housing for rent and buy,” the statement continued.

When the restrictions were implemented, they sparked an uproar from lenders and business groups, who complained that cash window limits would force lenders to send mortgage-backed securities to the private market, the publication reported. In the spring, demand for these properties had grown 84% over the past year, according to a report from Redfin.

The flashback drew positive responses from groups including the Community Home Lenders Association, which praised FHFA director Sandra Thompson for the overthrow.

[HW] – Cordilia James