Am I being lied to?

Question

Just had a loan officer tell me that...

a) regardless of the business type, money isn't lent to LLC's or the like for investment properties.  They lend to individuals and then you deed it to an LLC.

b) Fannie Mae only allows 10 mortgages

Just wondering how credible this guy is.....

Account Closed · Answer

To become a loan officer in some states costs nothing more than buying business cards. Hence some loan officers are learning on the job and do not know what they are talking about.

1. There is no legal reason a loan can not be made to an LLC. There are many good business reasons lenders will not lend to an LLC that has no real credit history and no assets.

2. The Fannie Mae comment is largely accurate. What it really means is many lenders who expect to sell the loan on to Fannie Mae or any other investor who uses the Fannie Mae guidelines will not be able to do so when the borrower has 10 or more mortgages in their name.

There are lenders who do not sell on their loans and they still have limits on what they will do with any one borrower. There are lenders who are fine with one borrower having many more than 10 mortgages. You need to check around or work with a well established mortgage broker.

Avoid the newer loan officers as they are learning their trade and your needs as an investor will exceed what most most mortgage brokers can deal with. Most borrowers are retail buyers with retail loan needs.

John Corey

Bryan . · Answer

I have run into the same thing on a Fannie Mae property. Their "preferred" lender indicated that I could not put the property in the name of my LLC even if I sign for the loan personally. I am now working with other lenders but I am afraid the house will appraise well as it needs a lot of work (the preferred lender does not do an appraisal as a result of their assoc. with Fannie Mae). My plan is to keep the property as a rental so I may end up having to pay cash and refi after I fix it up. Any other thoughts?

Michael Rossi · Answer

gkimmer,

I would RUN, not walk, RUN away from this loan officer.  He certainly should know better and is therefore either ignorant or lying to you (neither is good).  LLCs borrow money all the time and the property is then deeded directly from the seller to the LLC.

Mike

Jon Holdman · Answer

That's my understanding, too.

Jon

Grand Wally · Answer

Ok thanks guys.

Robin Vidovich · Answer

I don't like to say that someone doesn't know what they are talking about but will give your loan guy the benifit of the doubt and assume that it is a matter of semantics. The property is deeded to the LLC yes. But the owner of the LLC is the signer of the loan. Maybe your guy is not communicating well enough.