Can I get more loans if some are Freddie and some are Fannie

Question

A friend of mine said that I may be able to do a cash out refinance with more than four loans or get more than 10 loans if some are with Freddie and others are with Fannie? I have not heard of this before so I thought I would ask here.

I have read about some other tricks like putting some in my wifes name, finding a bank that holds their own loans or portfolio lenders.

Mike Martin · Answer

Mike Martin
Mid Oregon Lending
NMLS #296965 / #277334

David Krulac · Answer

@Mike Martin

The connection between the borrower and the business was that the borrower was re-fi-ing their personal residence, and owned another building in a different town that was rented to a business.  Even after providing the lease to the lender, they still wanted proof (they already had the borrowers last 3 tax returns) that the landlord didn't own the business.  Talk about anal!

Mike Martin · Answer

@Brant Richardson and @dave krulac

I work as a Mortgage Broker with numerous lenders, the answer can vary. The most common way we document no property liens is to get a copy of the insurance declaration page, there will be a spot for lien holders.  If the lien holder spot is blank then this document will satisify the underwriter. However on bare land most people do not carry an insurance policy. A title report or letter from a title company showing no liens can be used. Typically there will be a charge if the title company becomes involved.   The least common is a letter from a lawyer or CPA, these are usually difficult to obtain.

In regard to proving a negative.  I'm with you this can be silly and a painful request.  At what point do we stop.  The bottom line for why underwriters request this type of information is because they want to confirm they are seeing the entire financial picture. If they smell they are missing a financial obligation then the weird requests fly.  The proving of liens on property owned resulted from a few people not disclosing all debt and then not having the capacity to repay their loans.  The business ownership question shold not come up unless there is a link that is found linking the borrower to the business.  A federal tax return, CPA letter or possibly a letter from the borrower should satisfy most underwriters on the lack business ownership.

Franklin Romine · Answer

No liens with show on the title search when the lender is about to close on your refiance.  I enjoy working with protfolio lenders.  They are much easier to deal with once you establish a relationship.  You just have to find the right fit.

David Krulac · Answer

@Mike Martin

You being a banker might be able to answer this question, "Why do bankers ask questions that the answer is negative and hard to establish?"

Besides the question above about financing, which if you don't have financing is hard to provide, the banks ask similar type questions.  Besides providing HUD-1s and bank statements how do you prove that there is no financing?

Recently somebody I know refi-ing their home.  The bank/lender underwriting asked the borrower to prove that they did not own the business that was renting one of their rental properties.  A simply search of the states corporate officers would show that the borrower was not an owner of the business, but the bank wanted more.  How do you prove a negative?

I said to the owner "How do you prove that you don't own the White House, the Statue of Liberty, The Empire State Building (once the worlds tallest building and build in 1 year and 45 days and costs about 50% less to build than expected) or the Brooklyn Bridge?"

Brant Richardson · Answer

@Mike Martin I have one in cash now.  How would I go about "proving" there are no liens?  Do I need to do anything other than show bank statements going back X months which shows the cash was there, a wire transfer and my account down the purchase price?

My plan was to max out my ability to do cash out refinances, then max out Freddie/Fannie loans, and only then start moving into private loans.

Mike Martin · Answer

A typical question I get from borrowers on this topic is if a property financed with a private loan counts as one of the 10 financed residential properties.  The answer is yes.

Frequently borrowers do not disclose this property type on a loan application. Underwriters have all sorts of ways to find property you own even if you have a private loan that does not appear on credit.  Typically there is a digital trail when you purchase real estate.  Underwriters are required to confirm the lien status on any real estate you own.  If a property is owned with no liens the underwriter will request proof.

Brant Richardson · Answer

The goal is to own as many properties as possible that cash flow a minimum of $100/mo.  I have a chunk of money to use.  If I can do a cash out refinance and take out 100% of the down payment and rehab (or close to it) but still cash flow $100 dollars per door, then I want to repeat that as many times as possible.

Michael Murray · Answer

What are you trying to gain by refinancing? Cash flow or reducing expense looking for funds to get another property. I would sit down with your wife and set goals first, before speaking with a mortgage person, leverage is great but if you have been successful you might want an equity partner. I am a mortgage guy so all mortgages you good but you should run your numbers and see what is best for you before contacting a mortgage person. Tell them what you what to achieve and have them get products to fit your needs.

David Krulac · Answer

@Brant Richardson

Seek out local brick and mortar banks and credit unions for "portfolio" mortgages that are not sold to Fannie or Freddie.  There is no limit on these.  Also you can have 10 Fannie & Freddies and your spouse can have 10 Fannies & Freddies, with the properties being deeded in 1 individual name.