Wells Fargo Update: No more loans if you have 4+ mortgages

Private Lending & Conventional Mortgage Advice

Wells Fargo Update: No more loans if you have 4+ mortgages

Investor · Atlanta, GA · Member since 2012 · 408 posts · 37 votes

We just got a HELOC approved with Wells Fargo for a borrower that has over 4 mortgages. We started an application for another HELOC and they said that their rules have recently changed.

Just so you know..

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Kyle J.

Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes

13y

Dawn Anastasi Every lender is going to have their own overlays (rules), so just keep calling around and you'll find someone who will loan to you.

I don't do business with Wells Fargo, so I don't know their specific rules. However, as an example, here are some of the different things I was told by different banks/credit unions when I recently called around for loans on investment properties:

- One bank said they only allow up to 4 loans total, and only ONE with them. (So even if you only had two loans total, if one of them was with this bank they would not do another one for you.)

- One credit union said they allow a borrower to have 4 investment loans plus a loan on their primary residence (for a total of 5 loans).

- Two lenders said they allowed up to 10 loans.

- Another bank said they only allow 4 loans total (including the primary residence).

As you can see, a wide variety of responses. So, like I said, just keep calling around until you find someone willing to work with you.

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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
Last I was informed recently, a borrower can have up to 10 loans.
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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
Of course they need to qualify for each of them.
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Ben Bakhshi
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Investor · Atlanta, GA · Member since 2012 · 408 posts · 37 votes
13y
We just heard about this today. If a Wells Fargo branch you know of is doing otherwise, I'd like to know so we can complain, and hopefully get qualified.
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Paul Cordero
Scottsdale, AZ · Member since 2013 · 70 posts · 17 votes
13y
This is not true Ben. Sounds like you may had a WF rep that didn't know what they were talking about.
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Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
13y
I have heard and have experienced that many lenders will cap out at providing anyone with a mortgage when you already have 4 mortgages. I currently have 5 mortgages (that's including my own home) and 4 properties without mortgages. Even with 4 properties without mortgages, I cannot get another mortgage to save my life.

I wanted to use the equity in those 4 to start buying more, but found that no one will lend to me because of that magic number, not because I'm not a good risk. Actually I did have one lender approve me, then back out because they "realized" I had more than 4 mortgages. That was the only reason I was declined.
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Ben Bakhshi
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Investor · Atlanta, GA · Member since 2012 · 408 posts · 37 votes
13y
Originally posted by Paul Cordero:
This is not true Ben. Sounds like you may had a WF rep that didn't know what they were talking about.

Do you have a name or office or phone number of a Wells Fargo employee that I can reference if I wanted to contact my branch again about his?
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Ben Bakhshi
OP
Investor · Atlanta, GA · Member since 2012 · 408 posts · 37 votes
13y
Allow me to clarify, we are attempting to get financing for Investment properties and not a primary residence.
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Kyle J.
Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
13y
Dawn Anastasi Every lender is going to have their own overlays (rules), so just keep calling around and you'll find someone who will loan to you.

I don't do business with Wells Fargo, so I don't know their specific rules. However, as an example, here are some of the different things I was told by different banks/credit unions when I recently called around for loans on investment properties:

- One bank said they only allow up to 4 loans total, and only ONE with them. (So even if you only had two loans total, if one of them was with this bank they would not do another one for you.)

- One credit union said they allow a borrower to have 4 investment loans plus a loan on their primary residence (for a total of 5 loans).

- Two lenders said they allowed up to 10 loans.

- Another bank said they only allow 4 loans total (including the primary residence).

As you can see, a wide variety of responses. So, like I said, just keep calling around until you find someone willing to work with you.
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Joel OwensBusiness Member
Moderator
Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
13y
I think the confusion is coming in where up to 10 loans are allowed but many banks do not want to go over 4.

So the borrower gets confused. The answer is if that bank won't go over 4 you have to call other sources. You might not like the amount down, interest rate, or loan term for properties 5 - 10 as most likely they will be different than what you experienced from 1-4.
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Paul Cordero
Scottsdale, AZ · Member since 2013 · 70 posts · 17 votes
13y
I believe FNMA guidelines will allow for 10 loans.
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Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
13y
Someone should create a bank registry with whatever their rules are so it would be easier to find lenders. Or the lenders should publish their guidelines on their websites. I have called many lenders, and finding one that allows up to 10 mortgages per person is like trying to find a needle in a haystack. Very frustrating!
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Paul Cordero
Scottsdale, AZ · Member since 2013 · 70 posts · 17 votes
13y
Dawn, they have this, its called a mortgage broker, j/k

The problem with a registry is keeping it updated as guidelines change daily. Most banks sell their conforming loans to Fannie & Freddie, so their guidelines are interpretations of Fannie & Freddie's.

But guidelines are not the end all be all of lending decisions. They are like the center line on the road that keep you in the lane and going in the right direction. Every now and again you have to go off roading :)

My point is that most banks make exceptions if the deal makes sense.
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Mike H.
Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
13y
It is very much like finding a needle in a haystack. Just when you find a bank that does it, when you go back 3 months later for the next one, you find that the bank has discontinued the process. Likely, because of all the headaches they just went through to get your last done. :-)

The problem is that the fannie mae guidelines for 5-10 financing are simply too onerous because the bank would have to gather all the documentation for the other 4 to 9 homes. And banks don't have any extra incentive to do it. More work for same money is not a good thing so most banks simply don't offer the loan product.

This is where brokers come in to play. Unfortunately, most of the mortgage brokers went out of business because of all the crazy lending rules the govt put out there.

So, I agree, finding someone that can actually CLOSE a 5-10 loan is very much like finding a needle in a haystack. Although I have done 4 of them so far, its downright painful.

One took over 8 months to close - yes, 8 months.
The broker switched lenders twice.

The best one was that I had multiple refi's going at the same time. Same exact numbers for all 3 apps. Same documentation. The lender approved the first loan and then balked at the other two. Said the numbers didn't add up because my depreciation from the homes wasn't able to be counted as it wasn't on some specific line item on my return.

My cpa responsed thats the only place that depreciation can go so either they don't know what they're doing or they're just trying to back out.

Eventually, the mortgage broker's management bumped it up to the lender's management and they finally caved - although they did stick me with a bunch of nonsensical documentation requests.

They literally required me to show that the renter's security deposit went into my bank account. Made no sense. My reserves were documented and sufficient. What did it matter where the security deposit went....... It didn't and no other bank has ever asked me that before or since. Just the nonsense you have to deal with.

btw: I'd be curious to know which one is worse - lenders or inspectors. :-)

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Steven Hamilton IIPro Member
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
13y
Mike H.,

If your depreciation can't go on a certain line item then your CPA isn't advising you well enough. When there is a significan't number of items that cannot go on one line, you may want to consider using your own PM/contracting company at that point in time.

-Steven
[email protected]224-381-2660
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Mike H.
Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
13y
The problem wasn't with the cpa. The problem was with the lender not knowing what they were doing. I believe the lender wanted to see the depreciation in a line item on my personal return. But the depreciation was in my corporate return and they were too stupid to just go to the individual property schedules and add up the depreciation that was allocated to each house.

It was the dumbest thing I've ever seen.

The kicker was they did it on the first one and had no problem. I've never had anybody that had a problem with it before - they all know how to add depreciation. Then on loans 2 and 3, they had a different underwriter that was locked in to the one line item. My guess is because he had some training manual that said thats where it should be but didn't account for the depreciation to be on business returns.
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Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
13y
8 MONTHS???? Crikey, it sounds like it would be best to go under a hard money lender or private lenders rather than deal with banks. I just don't know how these guys who own like 300 properties do it.
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