A: refi 3 loans into 1? B: portfolio loans count in 4 loan limit?
Rental Property Investor · Melbourne, Victoria · Member since 2011 · 44 posts · 7 votes
Hi BP: sorry, two questions in one:
A: If I refinance 3 hypothetical conforming/secondary loans into 1 big loan, does that reduce the number of loans that count against my limit of 4? (And maybe a 3rd question: is the limit actually 10 now?)
B: My loan broker told me my 3 existing portfolio loans counted against my limit of 4, but I thought the limit was only for conforming/secondary loans?
@Steve Babiak and @Lance Luvaul and @Wayne Brooks
I do have to disagree with this one. I am in that situation and in fact have more than 10 loans. My banker just gave me loan #9 and #10 for Fannie Mae despite having a portfolio loan in place on another property. So that would give me more than 10. Further, I am approved for more portfolio loans through his bank. He calls his loans "keeping them in house" and not portfolio as the term. My previous portfolio loan is referred to as a "non-Fannie Mae loan." I am not sure if this differing terminology matters.
It is difficult to keep up the changing guidelines of these loans. Every time I go through the loan process, even it is just a month later, it seems that some Fannie Mae guideline has changed. I have to check with my banker every time I want to do another financing project.
"Keeping them in house" is the literal definition of putting a loan in the portfolio of loans. :) Interestingly there are also brokered portfolio loans, which is what it sounds like. A portfolio loan is any loan where there is not a ready place on the secondary market to sell it, so if it's a XYZ Bank portfolio mortgage product, XYZ Bank is committing to holding onto it for the life of the loan, or until XYZ Bank as a whole is sold.
Most jumbo loans are also portfolio (for loan limit reasons, not for "can't get a normal loan" reasons), though there are times where Chase will buy Wells Fargo A+ Jumbo paper, or PenFed will buy Chase A+ Jumbo paper, etc. I was at a firm that was stuck with a bunch of Chase A+ paper for a while due to an underwriting error repeated several times, and a deal was worked out where PenFed purchased the lot of them because PenFed did not have an issue with that thing that Chase did have an issue with. Anyways...
The Fannie 10 cap is indeed number of residential properties with financing, of any sort, on them wherein the borrower is personally obligated. There are various other reasons why a specific property might be excluded, some of which are clearly applicable to David's scenario in some way or another.
Back to the OP question, Lance: if one loan secures 3 residential 1-4 unit properties, then that counts as 3 financed properties in the Fannie cap. If one triplex has six private mortgages on it, that would count as one financed property.
The most common way around the Fannie 10-cap is to put 10 in her name and her name alone, then start putting the next ones in his name.
A: Depends if they are Fannie Mae loans. You now have a limit of 10 Fannie Mae loans.
B: Portfolio loans are NOT typically Fannie Mae loans and should not count against the limit of 10. You need to actually verify if your loans are Fannie Mae loans. Here is the link:
@Wayne Brooks: so the limit is not on the number of loans, but rather on the number of homes used as securities?
@David S.: it doesn't look like my houses are owned by Fannie Mae, but I gotta dig up my ITIN for my LLC (to enter into their lookup form) in case their records list it as the owner and not myself personally
...
B: Portfolio loans are NOT typically Fannie Mae loans and should not count against the limit of 10. You need to actually verify if your loans are Fannie Mae loans. Here is the link:
This quote is incorrect - portfolio loans do count toward the number of loans before you hit the conventional lending limit.
And as @Wayne Brooks already has posted, it is the number of properties subject to mortgage, so a blanket loan will count for the number of properties covered under that loan, whereas a HELOC in second position does not count as an additional property loan.
@Steve Babiak and @Lance Luvaul and @Wayne Brooks
I do have to disagree with this one. I am in that situation and in fact have more than 10 loans. My banker just gave me loan #9 and #10 for Fannie Mae despite having a portfolio loan in place on another property. So that would give me more than 10. Further, I am approved for more portfolio loans through his bank. He calls his loans "keeping them in house" and not portfolio as the term. My previous portfolio loan is referred to as a "non-Fannie Mae loan." I am not sure if this differing terminology matters.
It is difficult to keep up the changing guidelines of these loans. Every time I go through the loan process, even it is just a month later, it seems that some Fannie Mae guideline has changed. I have to check with my banker every time I want to do another financing project.
@Steve Babiak and @Lance Luvaul and @Wayne Brooks
I do have to disagree with this one. I am in that situation and in fact have more than 10 loans. My banker just gave me loan #9 and #10 for Fannie Mae despite having a portfolio loan in place on another property. So that would give me more than 10. Further, I am approved for more portfolio loans through his bank. He calls his loans "keeping them in house" and not portfolio as the term. My previous portfolio loan is referred to as a "non-Fannie Mae loan." I am not sure if this differing terminology matters.
It is difficult to keep up the changing guidelines of these loans. Every time I go through the loan process, even it is just a month later, it seems that some Fannie Mae guideline has changed. I have to check with my banker every time I want to do another financing project.
"Keeping them in house" is the literal definition of putting a loan in the portfolio of loans. :) Interestingly there are also brokered portfolio loans, which is what it sounds like. A portfolio loan is any loan where there is not a ready place on the secondary market to sell it, so if it's a XYZ Bank portfolio mortgage product, XYZ Bank is committing to holding onto it for the life of the loan, or until XYZ Bank as a whole is sold.
Most jumbo loans are also portfolio (for loan limit reasons, not for "can't get a normal loan" reasons), though there are times where Chase will buy Wells Fargo A+ Jumbo paper, or PenFed will buy Chase A+ Jumbo paper, etc. I was at a firm that was stuck with a bunch of Chase A+ paper for a while due to an underwriting error repeated several times, and a deal was worked out where PenFed purchased the lot of them because PenFed did not have an issue with that thing that Chase did have an issue with. Anyways...
The Fannie 10 cap is indeed number of residential properties with financing, of any sort, on them wherein the borrower is personally obligated. There are various other reasons why a specific property might be excluded, some of which are clearly applicable to David's scenario in some way or another.
Back to the OP question, Lance: if one loan secures 3 residential 1-4 unit properties, then that counts as 3 financed properties in the Fannie cap. If one triplex has six private mortgages on it, that would count as one financed property.
The most common way around the Fannie 10-cap is to put 10 in her name and her name alone, then start putting the next ones in his name.
Thanks @Wayne Brooks, @Steve Babiak, @David S., and @Chris Mason for your feedback, this was definitely helpful to me! Now I know I have plenty of room to grow into more loans. So now comes the hard part: lowering my DTI! (But that's for a different post.)
Thanks again, Lance