Can't Place Conventional Loan Title in LLC?

23 Replies

My mom's mortgage broker told her this:

"A conventional loan, Fannie, Freddie, or VA, FHA do not allow title into a LLC. Commercial loans (5 + units apartment buildings) allow it but not for residential. Or an Alt A lender allows it but the interest rate is much higher than a conventional loan."

in response to the question - How hard is it to obtain a mortgage loan with an LLC? Is he smoking rocks, or is this true? Can you not do a conventional loan with an LLC? All LLC folks here have Alt A or commercial loan?

Correct, all of those loans can only be to a natural person. 

However, as of about 3 years ago Fannie (only Fannie) allows you to buy in a personal name, then transfer title to an LLC...as long as the original borrower is the sole, (or maybe majority) owner of the LLC.

Originally posted by @Wayne Brooks :

Correct, all of those loans can only be to a natural person. 

However, as of about 3 years ago Fannie (only Fannie) allows you to buy in a personal name, then transfer title to an LLC...as long as the original borrower is the sole, (or maybe majority) owner of the LLC.

 Do you have a reference for this claim? Thanks

@Wayne Brooks / @Bob Okenwa -

Newbie here, but does this Fannie Mae provision mean that "Fannie-Mae-backed" mortgages are the only ones that allow for this? Would I basically need to find a lender that has Fannie Mae backing to accomplish this transfer (personal to LLC)?

What I have found is that over all lenders like homeowners who live in the home and put their own name on title.

These people get the best rates.

As soon as you start talking commercial or LLC you get bumped out of the homeowner category and all the fees and interest rates take a jump up.

Originally posted by @Brent Shields :

What I have found is that over all lenders like homeowners who live in the home and put their own name on title.

These people get the best rates.

As soon as you start talking commercial or LLC you get bumped out of the homeowner category and all the fees and interest rates take a jump up.

 Brent - this will not be owner-occupied dwelling.

@Wayne Brooks / @Bob Okenwa -

My question then is: is the transfer still doable/does fannie mae backingoverwrite a "due on sale/transfer" clause? Like if there's a due on sale/transfer clause initially, and fannie mae backs the loan, can you transfer into the LLC without the due on sale/transfer clause being exercised?

@Aaron Moayed

If it is currently backed by Fannie Mae and meets the requirements listed in the Selling Guide, you should be fine. You can always reach out to a loan officer/lender for more specifics in regards to your individual situation.

It all depends on loaning institution. Some lenders allow you to do a conventional loan under your name then as soon as you close you transfer the title under your business name as long as the payments are still linked to the purchaser. It’s called, “quick claiming.”

Originally posted by @Allen C Herring :

It all depends on loaning institution. Some lenders allow you to do a conventional loan under your name then as soon as you close you transfer the title under your business name as long as the payments are still linked to the purchaser. It’s called, “quick claiming.”

 I think you mean quit claim, but yeah, it’s dependent on the mortgage being backed by Fannie Mae. Got this figured out now, but thanks for the input

So this kind of a loan will allow me to transfer the property to my LLC, which will protect my personal assets?

@Sean S. , yes, a conforming loan owned by Fannie Mae can potentially be transferred to your LLC.

Regarding asset protection, there's a ton of other threads on the forum covering that.  Let's not go into it here.

@Brit F. @Allen C Herring

Hey there,

So if I'm gathering this correctly and understanding. The fannie backed mortgage I currently have would be transferable to my LLC provided it met the guidelines of D1-4.1-02. In my case the mortgage closed prior to their required date in 2016, and is 4 years old already, so I am not eligible for transfer.

So is my only other option here on the mortgage in question (a rental) to either just shoot for the umbrella insurance policy, or to refinance out to either a commercial loan or some other loan option? 


@Kevin K. , you're correct - the loan is too old.  But, if you were thinking of doing a refi, instead of going with a commercial loan, you could just refi into another conforming loan, and if Fannie buys it, the date would meet D1-4.1-02.

Alternatively, for the cost of doing a refi, that could cover many years of umbrella insurance.