New law restricting local banks from funding loans for properties consisting of less than 5 units

[Jeff Kennedy]

Has anyone heard of this?

I have a duplex in Northern California. We have owned it for two years. We now have quite a bit of equity and I'm looking to refinance and pull some cash out for another deal. The property is financed at a local bank with a portfolio loan (because of some odd zoning that prevented us from using a conventional mortgage). I have a good relationship with the bank and we started the refi process a few weeks ago.

I just received a call today from the banker and he said that we may have a problem. He told me that there is a new law that may prevent them from doing this refinance because it is under 5 units. Our existing mortgage is with this same local bank. Does anyone know about this new law/rule??

[Albert Bui]

Perhaps that particular bank can't do a 2 unit home on a 1 unit lot(R1) on their portfolio program. Have you asked them about conventional guidelines? Generally what happens is the appraiser will appraise it at its highest legal use or in this case a SFR based on the zoning for value purposes.