Does this count against 10 mortgages?

20 Replies

The lender that I'm working with has stated that each person can have a maximum of 10 mortgages individually.

If I own a property with a partner and my partner owns the mortgage solely in their name, does that count against my maximum of 10? I am only on title for this partner property. The mortgage does not show up in my credit report because it is not connected to my name at all.

I guess what that comes down to is the question of: does being on title for any mortgaged property count against a maximum of 10?

Originally posted by @John S. :

The lender that I'm working with has stated that each person can have a maximum of 10 mortgages individually.

If I own a property with a partner and my partner owns the mortgage solely in their name, does that count against my maximum of 10? I am only on title for this partner property. The mortgage does not show up in my credit report because it is not connected to my name at all.

I guess what that comes down to is the question of: does being on title for any mortgaged property count against a maximum of 10?

It is not 10 mortgage, it is 10 financed properties. That means any property you own that has a loan or loans against it. Even if it doesn't show up on your credit report, you may be required to disclose it on a mortgage application. You have to list all properties you own. Also note that any loan counts, so a HELOC makes it a financed property, If you have a mortgage and HELOC on the same property, it is just one financed property.

I have hit the limit a couple times. 

How many properties do you have? Are you close to the 10 property limit or is this just looking ahead?

Originally posted by @John S. :

Thanks @Joe Splitrock! That makes sense that it would be any financed property. I'm currently at 4 and in the process of acquiring 5 more.

 I should also mention that the 10 financed property rule is for Fannie Mae or Freddie Mac backed mortgages. If you are seeking regular commercial bank loans or portfolio loans, they will not care about the number of financed properties. Are you trying to write 5 separate mortgages at the same time for this group of 5 homes? That seems like it could be a challenge for underwriting, but of course I have no details on your personal financial situation. If the purchase is a chunk of 5 homes, a portfolio loan may make more sense.

@Joe Splitrock It's 5 properties from a trust and I'm working with different lenders to see what makes sense for us. Package vs individual - we're leaning towards individual and that's why the 10 count will possibly play into the mix.

Originally posted by @John S. :

@Joe Splitrock It's 5 properties from a trust and I'm working with different lenders to see what makes sense for us. Package vs individual - we're leaning towards individual and that's why the 10 count will possibly play into the mix.

 If you wouldn't mind sharing details on what the choices look like, interest rate, upfront costs, terms, etc. Once you get the proposals back, it would be interesting to see how they compare. Buying a group like that is nice. 

Originally posted by @John S. :

@Joe Splitrock It's 5 properties from a trust and I'm working with different lenders to see what makes sense for us. Package vs individual - we're leaning towards individual and that's why the 10 count will possibly play into the mix.

As Joe pointed out, the limit is “10 mortgaged properties”….a single blanket loan on 5 properties or 5 individual loans still count the same…5 mortgaged properties.

@John S. I would certainly trust @Joe Splitrock answer over mine but Joe didn't specifically answer your question. I would assume if the loan is not in your name it is not considered your mortgage. Owning a property and owing on a mortgage are two separate things and usually but not necessarily connected. 

I'll leave it to Joe to correct me if necessary. 

*disclosure - I am not advocating that anyone do this because for all I know it could have legal repercussions...

@Ned Carey I guess if we get technical, would I be in breach signing any documentation and not disclosing my position on title of the partner property? It wouldn't show up in my credit report and the property has its own bank account. Without the lender doing a tax search in the county or me disclosing it, the lender really has no way of knowing about the property...

Hey all

Do commercial loans count against the ten?  For instance, if I had 8 residential loans and 3 commercial loans, would I be out of the "ten" or would I still have 2 left?

Thanks

Originally posted by @Chris John :

Hey all

Do commercial loans count against the ten?  For instance, if I had 8 residential loans and 3 commercial loans, would I be out of the "ten" or would I still have 2 left?

Thanks

Yes, “10 mortgaged properties”, doesn’t matter what type of loans.

@John S. It IS possible that a property could go undetected however there are a two specific things that come to mind which would blow your cover

1. If you are providing tax returns and the property shows up on Schedule E then the lender will see that you own the home.  If the Schedule E shows that you are deducting mortgage interest (line 12) then the underwriter should inquire about that debt.

2. Most lenders pull a report commonly called a "drive report" or a "fraud report".  This report pulls public records from all over the country.  Among other things, this report tells the lender about any properties that a borrower might have ownership interest

Originally posted by @Ned Carey :

@John S. I would certainly trust @Joe Splitrock answer over mine but Joe didn't specifically answer your question. I would assume if the loan is not in your name it is not considered your mortgage. Owning a property and owing on a mortgage are two separate things and usually but not necessarily connected. 

I'll leave it to Joe to correct me if necessary. 

 There are really three different questions. 

1. Does he need to disclose the property? The answer to disclosure is yes, according to Fannie Mae underwriting guidelines:

Property you own:

▪ Enter the details about each property (including undeveloped land) you own and/or for which you are obligated on a mortgage

https://singlefamily.fanniemae...

2. Does the property count as a "financed property" against his limit? This I am not 100% sure. It is a financed property that he owns, but the financing is not in his name. I hate to even guess at this question, but I am sure the lender could ask the underwriter and get a clear answer. 

3. Will they find out if I don't disclose this? It is very likely they will find the property and possibly even bank accounts. You could say, "my mistake" and probably not get in any sort of trouble. I failed to disclose a couple bank accounts on a mortgage application. Underwriting found it and I just had to send the bank statements. In my case, they were savings accounts with small balances, so I was just being lazy in not sending them. They actually strengthened my financial position if anything. I was surprised they found them. The risk is more that they will find the property and it could create last minute problems. Two weeks before closing after spending thousands on appraisals, this could come back to bite you. I personally think it is better to confront questions head on and up front, rather than "hope" you don't get found out later. You will be required to send 2 months statements for ALL bank accounts and two years tax returns. They will do a public records search. It seems between these searches that it will be hard to hide, so I would bother trying.

Gosh, just go to DSCR lenders! This problem, plus the problem of reserve requirements, high FICO, seasoning and a few other issues, go away. You are planning to get to 10, so just plan to go way past 10 and move over to the DSCR side of the house.

@John S.  
       would I be in breach signing any documentation

Without reading the specific rules I don't know. My crude knowledge of the rules tells me that I would not hesitate to leave off that mortgage, with a clean conscience. Of course if they ask about the property I would list it. Honesty truly is the best policy - even when in the short run it seems to hurt you. 

The fact that you are not responsible for that mortgage means that the mortgage does not affect your ability to repay the new mortgage in any way. It does however affect the net income that you might get from that property and that income may affect your ability to qualify. I think the best approach is to ask up front and maybe add a footnote to the application.

Regarding the 10 mortgages, Once you hit the 10 limit, there are still lots of lenders that do other types of loans, As @Kerry Baird and @Rod Hanks mentioned . I do not have a single Fannie or Freddie loan. 

So as an update - I think the answer I arrived at is "it depends". Each lender I spoke with gave me a different answer. For this deal I'm using conventional financing because even with taking on 5 more, my mortgage total is at 9. The interest rates being 3.625 were too good not to move forward with conventional.  

@John S. I think a clarification is in order. 
Did you and your partner Buy the property together from the beginning or were you Added to the title later?

The Note is the obligation to pay the debt, while the Mortgage is the document that pledges the property as ecurity for the Note. 
If you initially bought the property together then, even though you are not responsible on the Note, you Did have to execute the Mortgage document securing the property. So, you Do have a Mortgage on that property…..in the county land records.