Number of mortgages per individual

Buying & Selling Real Estate
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Number of mortgages per individual

Nate Whitmore
Grand Rapids, MI · Member since 2012 · 2 posts · 0 votes

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.

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David Beard
Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
13y

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.

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  • Brian LevredgePro Member
    Investor · Chattanooga, TN · Member since 2009 · 1k+ posts · 903 votes
    13y

    I don't know why a bank would sell to either Fannie or Frauddie. As I understand the limits, those are limits on the loans themselves, and not on the number of properties. It sounds like you have an underwriter who either doesn't understand the rules or is looking for a reason not to approve your refi. You could always tell the bank that you may have to find another lender willing to work with you if they won't. If however you are dealing with a large lender (BA, WF, Chase, etc.) you can pretty much count on it falling on deaf ears. It might make more sense to find a portfolio lender, or possibly refi the LLC properties into a single, commercial mortgage.

    Fannie does have different underwriting standards for loans five through 10 than they do the first four loans. With the fifth, you have to two years of tax returns per per property, six months reserves per property (in addition to your down payment) and a FICO north of 720.

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  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    13y

    I have also understood it to be 4 mortgages, not 4 properties.

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  • Nate Whitmore
    OP
    Grand Rapids, MI · Member since 2012 · 2 posts · 0 votes
    13y

    Thats what I tried to tell my mortgage provider but he wouldn't budge. He wished me luck in finding a provider that would allow me to refinance. I have my reasons that I want to stick with this bank so it is frustrating that he will not move on this point. Just doesn't make sense to me and I figured if I could find something concrete on the Freddie Mac website that states that properties within an LLC are not counted against my limit that I could direct him to that spot but I can't seem to find that.

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  • David Beard
    Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
    13y

    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.

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  • Brynn Sorenson
    Banker · Brookfield, WI · Member since 2008 · 3 posts · 0 votes
    13y

    You should be able to refi with a new fannie mae loan not freddie. The number of properties are what is counted not the number of mortgages. 5 is fine. The ones in the LLC will be counted. Now if you are trying to do a HARP loan on this investment property because its underwater or doesn't meet the 75% LTV limit on an investment property and the loan is owned by Freddie then you will be stuck with the 4 property rule and not be able to do the Freddie Open Access HARP loan.
    Regards,
    Brynn

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  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    13y

    We had an investor last night @ our REI meeting indicate he deals with a privately held/owned bank & is up to 10 properties & mtgs.
    But for each new one he had to have 6 months pmts in reserve & his credit score was over 720.
    He couldn't get pass 4 elsewhere.
    I don't remember if he disclosed the LTV or interest rates.

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