Number of mortgages per individual

[Nate Whitmore]

I own 5 rental properties. Three of them are in my sole member LLC, are purchased on land contract and I did NOT sign personally for them.

2 of them are in my name and I have conventional mortgages on them.

I am trying to refinance one of my properties that I have a conventional mortgage on and I am running into an issue as my lender claims that even though the 3 properties are in my LLC they still show up on my personal tax return and hence are used against my limit of 4 properties. I don't really understand why my properties that are in my LLC count against me when my primary residence which is in my Wife's name does not, even though we file our taxes together.

I called Fannie Mae and their limit is 10 properties while I also called Freddie and their limit is 4 properties. So now to my questions. First off, how does a bank determine if they want to sell to Freddie or Fannie? Secondly, should my houses that are in my LLC count against my limit?

Any input would be appreciated. Please let me know if I need to further clarify anything.

[David Beard]

No, it is based on "financed properties". So if you have a 1st and 2nd mortgage on the same property, this counts as one. Also, all 1-4 unit properties financed either by you, or by an LLC that you have an interest in, DO count toward the limit, this is stated plain as day in Fannie's guidelines. It doesn't matter if you roll them into some sort of blanket mortgage with a local bank, as it is all based on # of financed properties, NOT # of loans.

Only if the property is held (both deed and mortgage) in a C or S Corp, is it excluded.

See Page 230 of the Fannie selling guide (Nov, 2012 version) under the "Multiple Financed Properties" section.