Bank will not waive escrow

9 Replies

I am trying to do a cash out refinance on a triplex that i had purchased in February with cash. Since I purchased under my LLC and preferred to keep it that way i went to my local bank that i do business with and the loan officer said it was not a problem. Their LTV kind of sucks at 65% for a cash out refi but no other banks wanted to touch it. Ok fair enough. Now I get an email from the loan officer a month after submitting docs saying that they can not waive escrows due to being an investment property. I have never heard of this before and just sounds ridiculous to me. Has anyone heard of a bank not waiving escrows on an investment property?

that's probably a specific bank requirement depends if it's a portfolio loan or if it's conventional loan from the sounds of it it is a portfolio product.

I have tried to avoid escrows and was told I could do one of them or the other, but they would raise the loan rate.  The other one I couldn't do at all.

At your LTV this isn't required so it's probably a portfolio loan or it could be an investor overlay.

Typically the only time you'll be told to do impounds ( escrows ) is if it's MI ( mortgage Insurance ) or if the LTV is over 80%

I was aware if the LTV was above 80% than it would be required but not at a 65% LTV. If this is a portfolio product which I am sure it is, than I guess this is something I have no control over?

I was thinking about switching banks and possibly putting the loan in my name instead of the LLC to get around it if they will not do it. Just worried about having to source funds that were used to purchase since i am sure FNMA will require that.

I was told the same thing as @Jon Holdman

When I bought my 4-plex The bank said if we were to forego the escrow they would raise the loan rate by a 1/2% or something like that.

Have your funds been in your bank account for at least 60 days?  If so you won't need to source those funds.

Originally posted by @Shaun Weekes :

Have your funds been in your bank account for at least 60 days?  If so you won't need to source those funds.

 Unfortunately I did not have the funds seasoned for 60 days. Had a wire or two come in about a month or 1.5 months prior to closing.

The new sourcing rules through fannie mae has made it a lot easier to close deals now. We used to document every single deposit if it was needed to close within the 60 day period prior to closing now only deposits over half of your average monthly income needs to be sourced. So strategic deposits under 50% of your monthly income could be utilized to reduce your brain damage through out the process.

If you make 10,000 gross a month you can deposit of up to 4999.99 with out documenting the funds so next time you go to deposit that 13,000 deposit you might consider doing 3 deposits of 4333.33. This only applies to Fannie Mae as of a week ago or so.

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