Do Blanket Mortgages still exist?

Question

Can anyone suggest a lender that is CURRENTLY willing to lend on a cash-out refi for multiple single family homes on one blanket mortgage? Some have current mortgages to pay off and others are owned free and clear.

If you know of any lenders offering this product, please let me know. Thanks!

If you know of any lenders offering this product, please let me know.  Thanks!

Bill Gulley · Answer

I see a question about the total value, that may give a misconception.

Each property pledged will need to meet the LTV (80/75/70/?%) level that lender is willing to take in portfolio, it's not as if you can throw in a bunch of properties at a total market value and get a % of that total.

Rates and terms will be less favorable in some cases as there is a higher cost to service and manage such loans, having to review 6 or 8 times the number of property issues under one loan.

Small and medium size banks will most likely be the best bet, IMO, at least it is in my area, it's not really efficient for large banks unless it's a subdivision or multiple parcel project.

Each property will be appraised, have title searched, with all the aspects addressed as if a single loan were made on that property. A slight advantage is that an appraiser and title company may give some pricing breaks on larger orders and the settlement cost shouldn't be as high as the total of individual closings. There will be filing fees on each property.

The thing to look for in a blanket mortgage is a release fee for each property. This is a % of the loan that the property carries as collateral. Many will want a higher % to reduce the total debt outstanding but this you can negotiate. In other words, you might have a 100K proprty, they loan 75K, they may want you to pay 85K to release that property if you were to sell it. The extra 10K reduces the debt and the LTV of remaining collateral. Each property may well be different as some properties will offer better collateral. Otherwise, a borrower could sell off the good properties leaving the worse properties financed.

A lender may also want a blanket insurance policy, cost could be more than individual policies, they are not always cheaper but usually are a  better deal.

And, if they are rentals you'll probably have an assignment of rents, just customary.

They are certainly available and will always be around from some lender as a type of loan product. Consider a car dealer, a floor plan (financing 50 cars at some total loan amount) is basically the same thing allowing the replacement of collateral. You can do that as well with RE, you could sell one and buy another and place that under the blanket loan.

Good luck finding the right lender, they are out there. :)

Karen Margrave · Answer

I found a site that has several lenders, with different loan categories. It's easy to search, etc, and there's brokers etc. all over the country. BP also has a list of Hard Money Lenders (See above under Resources) and one of the BP members is associated with an organization

Assoc. of Private Lenders

List of Lenders

Good luck! I'm not affiliated with any of the lenders, just think it's good info.

Mike H. · Answer

Blanket mortgages are about as easy to find as a leprechaun's pot of gold.

I actually do have one on 3 properties that a large local bank did for me back in 2010.  I have tried to find others to do them but have had no luck. I've gone through mortgage brokers, mortgage bankers, mortgage lenders (i.e banks). I've tried everything known to man.

What it comes down to is that the banks will typically tell you know because its a hassle for them to do. They have to check taxes and insurance on each of the homes individually - every year. And then they need to provide a release clause in there and deal with that when/if you sell a house.

And if they get stuck with a bad loan, they have to repo each of the homes and then go put each of them up individually.

The commercial guys simply like staying with what they know - commercial properties.

I'm not saying it can't be done because I do think there's always a bank that will do anything. But its going to take more than just a phone call or two. You're going to have really work a relationship with a banker that works at a bank that didn't take a bath on SFH's during the bust.

Now, I do have local banks that will refi individual homes into portfolio loans. They're commercial loans that they keep in house. But they only want to do those individually (I've asked many a time) because it simplifies things for them significantly that way.

Is there a reason why you need to get out of your current loans?

If the goal is just to pull money out, you might be better served to just attack them one at a time and do individual refi's for the ones that are owned free and clear and/or have the most equity.

Deborah Burian · Answer

@Ben W. - I have one and have been offered an additional one recently, though I passed.  It's a very small local bank and they're not going to lend in Illinois but I suggest you visit your local community banks and talk to their commercial folks.

Roy N. · Answer

We've been looking for a blanket - or portfolio - mortgage for about a year now.   They use to be readily available, but it seems Canadian lenders have stopped offering them when it comes to "residential" (1-4 unit) properties.  They can still be arranged for commercial portfolios, but the interest rate differential outweighs the benefit of drawing smaller properties into such a mortgage.

James Wootton · Answer

Amen. Blanket mortgages are everywhere, especially on commercial property.  They can help a borrower (and lender) support the needed LTV, by adding sufficient other property as collateral.

Also, several times I have used the existence of a blanket mortgage to use the existing lender to carry the financing on the parcel being sold to my new buyer. The existing lender already knows the collateral. They may also be motivated to have their existing borrower reduce debt.  The lender gets a fresh borrower with better capacity to pay. It makes for a quick loan approval. sometimes with a relaxed down payment required. Look for blanket mortgages.

Jim

Darrin Carey · Answer

Just this month I set up some local investors with blanket mortgages for properties in Ohio. They have been with smaller local and regional lenders.

They are still out there.

Bill Gulley · Answer

Do you have Mercantile National Bank there? Appraisals will cost you, might consider just the high equity properties at 50/60% LTV.

Just a note too, make sure you get a release fee or amount on each property secured so that you can sell off one property without giving it all to the lender or having to payoff the entire loan. :)

Michael Seeker · Answer

How many properties do you have and what is the total combined value of them?  I know an investor who was able to get a portfolio loan on excellent terms, but it was for around 100 multifamily properties.  If you're talking a handful of SF properties, I doubt you'll be able to find a blanket loan.

Do Blanket Mortgages still exist?

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