Freddie Mac now allowing LLC transfer (as of 10/20/2021)

[Danial Qureshi]

I just discovered that Freddie Mac recently began allowing property title transfers to an LLC after an amendment to their servicing guidelines, effective on 10/20/2021.

Until now, only Fannie had allowed LLC transfers (since 2017), with Freddie still restricting the practice officially. After this amendment, both Fannie & Freddie servicing guidelines have virtually the same language around LLC transfers where they essentially allow the transfer as long as the loan is 12 months seasoned and the controlling interest in the LLC is the original borrower.

Relevant text is posted below but here is the direct link to the relevant servicing guideline on Freddie's website:

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.

Hope someone can benefit from this, I hadn't found widespread mention of this on BP so wanted to share.