Single Asset Entity for Fannie Mae Loan

5 Replies

Hi All,

I am refinancing a 26 unit apartment building in Idaho with Fannie Mae. I chose to hold the asset in my name and get a ton of insurance, umbrella, etc. But, with the refinance, Fannie Mae is requiring that I hold title to the property in a single asset entity (mostly likely they prefer an LLC). I live in CA though, which is going to make this expensive.

Do you have any options other than an LLC that might work for my situation with Fannie?

This is required by the agencies. No way to get around it unfortunately. Check with your counsel and see if you can create an LLC in Idaho. Could be cheaper.

The reason they need this is to create a bankruptcy remote entity. 

Happy to help if you have questions. Good luck. 

Originally posted by @Matt Kvalheim :

Hi All,

I am refinancing a 26 unit apartment building in Idaho with Fannie Mae. I chose to hold the asset in my name and get a ton of insurance, umbrella, etc. But, with the refinance, Fannie Mae is requiring that I hold title to the property in a single asset entity (mostly likely they prefer an LLC). I live in CA though, which is going to make this expensive.

Do you have any options other than an LLC that might work for my situation with Fannie?

The lender is going to want the entity to be located in the state that the property is located in. They also want the single asset entity with no other encumbrances or obligations to make foreclosure and transfer the asset easier in the event of default. 

Just an FYI you never want to put any assets in your personal name. Insurance policies and umbrella policies have lots of fine print and loopholes that will not cover you at the end of the day. Insurance companies know how to get around paying out claims.

Originally posted by @Chris Collins :

This is required by the agencies. No way to get around it unfortunately. Check with your counsel and see if you can create an LLC in Idaho. Could be cheaper.

The reason they need this is to create a bankruptcy remote entity. 

Happy to help if you have questions. Good luck. 

yes, even assuming an Idaho LLC, his CA residency will tax him $800/year for his membership interest. He need a creative solution.