Using an LLC/entity to purchase an REO

[Stephen Polizzi]

I've been told that REOs don't want offers and closing docs to be done through an entity such as an LLC because it clouds whether or not its an arms-length transaction. Is this true?

Recently I closed on a deal with a real estate agent partner and she used her personal name to close rather than our LLC. She's a close friend of the family, so I'm not concerned about malfeasance. She is quitclaiming the deed over to our LLC now. When I asked the reasoning, she gave the above explanation and the lawyer who closed the deal also gave me the same explanation when asked. The alternative was to have all 5 of our LLC members close and then quitclaim but she claims that this too would be an impediment. This particular deal was through HUD, but all explanations were generalized to REOs not just HUD.

What's the actual deal with this, does anyone have experience?