Know about the Freddie/Fannie changes to the "due on sale" clause

[Grant Shipman]

There were changes made to this issue w/in the last couple years. They concern being able to transfer a title into an LLC w/out the due on sale clause being enabled to be exercised by the lender.

[Grant Shipman]

Quote from @Chris Seveney:

@Grant Shipman

Not sure where that info is coming from but it’s not accurate. Lender can call a loan if it’s transferred

Odds are they will not but they still have ability to.

 Please see below.  Let me know if you understand this different from me. Fannie has something similar, and I'm happy to share that if you can't find it.  What do you think? 

Freddie Mac 8406.4: Additional permitted Transfers of Ownership

8406.4:Additional permitted Transfers of Ownership:

• The transfer is to a limited liability company (LLC) or limited partnership (LP), provided that:
  • The managing member/general partner of the LLC/LP is the original Borrower. If there are multiple Borrowers, all of them must be members/partners of the LLC/LP, and at least one of them must be a managing member/general partner. If the transfer results in a permitted change of occupancy type to an investment property, such change must not violate the Security Instrument (e.g., the 12-month occupancy requirement for a Primary Residence), and
  • The Servicer notifies the original owner or natural person that the Mortgaged Premises transferred to an LLC/LP must be transferred back to the original owner or natural person prior to any subsequent refinance or modification application to meet Freddie Mac's underwriting requirements.