Can a mortgaged property by an individual be titled as an LLC?

Question

Is it possible to have the title of an investment property named as an LLC with 3 individuals as members with one of the members the sole mortgagor on the property?

Bob Okenwa · Answer

@Kurt K.

You cannot go through Fannie Mae as they do not originate loans. A loan backed by Fannie Mae would fall under those guidelines and Fannie Mae deals with conventional loans. FHA, VA, portfolio loans, and jumbo loans would not apply.

If you want to buy a property under your name and then later transfer it to an LLC, you can do so without fear of the due on sale clause being triggered so long as the loan is backed by Fannie Mae and you meet the guidelines outlined in the Fannie Mae selling guide.

Bob Okenwa · Answer

You can make this transfer to a limited liability company (LLC), provided that

• "The mortgage loan was purchased or securitized by Fannie Mae on or after June 1, 2016, andthe LLC is controlled by the original borrower or the original borrower owns a majority interest in the LLC, and if the transfer results in a permitted change of occupancy type to an investment property, such change does not violate the security instrument (for example, the 12 month occupancy requirement for a principal residence).

the LLC is controlled by the original borrower or the original borrower owns a majority interest in the LLC, and if the transfer results in a permitted change of occupancy type to an investment property, such change does not violate the security instrument (for example, the 12 month occupancy requirement for a principal residence).

Note: The servicer must notify the borrower that a property transferred to an LLC must be transferred back to a natural person prior to any subsequent refinance application in order to meet Fannie Mae’s Selling Guide underwriting requirements."

This is directly from the Fannie Mae selling guide and is only applicable to Fannie Mae loans.

Kurt K. · Answer

@Bob Okenwa I currently have an LLC and all of my properties are in my LLC. Are you saying if I want to buy a property and add it to me LLC that I HAVE to go through Fannie Mae for a loan? Or can I attain a loan from any bank and add that property to my LLC?

Can a mortgaged property by an individual be titled as an LLC?

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