WASHINGTON-Restrictions on credit are moving into new and more specialized niches of the mortgage market.
The latest to feel the pinch:

• Cash-out refinances.
• Loans with anything less than full documentation of borrower income, credit and assets.
• Mortgages for certain second-home purchases.
• Investment loan applications where the buyer already owns at least three other rental properties.
• Mortgages to borrowers with "nontraditional" credit, such as "thin files" with scant information at the three national credit bureaus.
• Short-term construction loans that convert to permanent mortgages.
• Adjustable-rate mortgages where the first rate adjustment occurs within 60 months after closing.

Scheduled to take effect for all loans delivered after August 8, Freddie Mac said it plans to restrict financing to second home and investment real estate purchasers who already have "individual or joint ownership" interests in multiple properties. In the case of second-home buyers, they will be ineligible for new mortgages through Freddie if they have ownership interests in more than a total of four properties securing debt, including the one they propose to finance.

Similarly, loans for rental houses, rental condos, and other investments properties will be ineligible if the borrower has ownership stakes in a total of four units. Previously, Freddie allowed investors to own up to 10 rental properties carrying mortgages.