Lender won't let me move the property to my LLC

[Daniel Colon]

Hi!

I just bought my 1st investment property, a brand new home with DR Horton, and used DHI (DR horton lender) for the mortgage, they told me they were going to sell the mortgage and I should wait for that before moving it to the LLC. Now PennyMac, is saying that they won't let me do the change.

I have concerns about tax benefits and liability. I rented to house within 3 weeks and they are paying to the LLC bank account and I am paying the mortgage with the LLC account.

Has anybody dealt with this? Any ideas on how to make this work without having to pay off the mortgage? I'm also looking for a tax lawyer and accountant who can help me with my taxes and this situation.

Thanks

[John Morelli]

Don't listen to these hacks, just cooperate with your original lender, by allowing them to get loan sold and securitized (90 days or less), and do yourself a favor by letting your new lender or servicer get the loan boarded onto their systems.

Once the above takes place (or you've given them their reasonable allowance of time requested), just transfer title to your LLC. Both FNMA and FHLMC permit this, under the following circumstances:

• Notes: For all such transfers affecting mortgage loans purchased or securitized by Fannie Mae on or after June 1, 2016, the transferee is not required to occupy the property
• a limited liability company (LLC), provided that
• • the mortgage loan was purchased or securitized by Fannie Mae on or after June 1, 2016, and
  • 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).
  • 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.

Citation: D1-4.1-02: Allowable Exemptions Due to the Type of Transfer (04/13/2022)

Now, you will still have the Note and reporting in your name individually and will still be personally responsible for the mortgage and most likely, the manner of transfer will enable any litigant to pierce the veil of your LLC, but you'll have what you wanted, for whatever reason.

The technical permissibility of the transfer aside, as others have stated, it pretty worthless to you in the context you described. 

Also, if the subject property is in California, or any other DOT state, you have some additional considerations with the conveyance.