Torrance, CA · Member since 2014 · 4 posts · 2 votes
My business partner and I have multiple multi family apartment buildings held as a General partnership. They are all cash flowing and we both have good credit scores and Good incomes. I am trying to refinance my Single family home (residence) from a 3.5 percent 30 year to a 2.5 percent 30 year, but when I tried I was told by the lender that due to Covid they no longer accept rental income as part of the underwriting. Therefore, I have a bunch of debt without the income to offset. So I have two questions? is this true that they can't use rental income in the calculations and if I put the buildings in an LLC won't the mortgages still be in my name and therefore counted against me? I'm in Los Angeles. Let me know your thoughts please.
@Erick Lee That sounds fishy. Who is your lender that is claiming this? There is validity in covid rules as most lenders are requiring proof of rental deposits and canceled checks to document rent being paid but a complete omission of rental deposits isnt something I have seen post covid. Are the rents being reported on your schedule E? Traditional lenders (chase, BofA, etc) do not allow you to close while the property is owned in an LLC but a quitclaim can solve that issue easily.
DM me for details if you dont want to post publicly but Im a local LA lender and broker and there seems to be some missing info here on the lenders side.
FYI, I just refinanced a four unit in Midcity at 2.99 30 yr fixed that was in an LLC, we just quitclaimed the deed to the person, then back after closing. No issues there. Full doc loan.
I think it might just be your lender. Remember, conforming loan criteria can be one thing, but what a lender does to originate a loan can be that criteria or tighter as I have found by experience. Just like when Chase put out there that they wouldn't be originating loans for anybody with less than 700 credit score. That was just their criteria to my understanding. I don't believe that the conforming loan standards change (for that criteria anyway).
Send me a direct message if you want to talk to a loan officer I work with. Good luck.
What they ask maybe a declaration of Schedule E in your tax return, a lease agreement, proof that you're not taking any forbearance due to the covid and proof of deposit/cashed cheque as rental payment proof. The refi process is just very long these days, they really want to make sure we're credible and will not apply for any mortgage relief.