Quit Claim Deed to LLC on Fannie Mae Financed Property

[Eric Stoltz]

I am getting ready to purchase multiple houses as investment properties. While the banker is telling me that Fannie Mae will write loans on investment properties as long as there is 25% down (30 year fixed) they do require that it be titled in the individuals' names and not an LLC. So two questions:

1. Is my banker simply skirting some rules with Fannie Mae and presenting it as a non-investment purchase and

2. Will I trigger a loan repayment by performing a QCD to my LLC which is owned by the individuals that will be on the title? The individuals would still be on the loan so I don't see an issue but then I'm not Fannie Mae and they aren't exactly a logical entity.

Thanks for the help.  

[David Begley]

Originally posted by @Account Closed: 

As a former Fannie Maer, don't do it

@Eric Stoltz, but if you do, do it, you might want to wait after 12 months pay history, and then never be late for a payment by even a day as long as you pay on the note. You really don't want to QC before the mortgage is actually sold to Fannie/Freddie and/or the servicing rights are sold. (That is an on-going risk too that the paper or servicing will subsequently be sold and a new Title search ran.)

Also, you might want to think twice about changing the loss payee on your Hazard Insurance Policy to the LLC, which could cause a trigger/red flag, but then the Catch-22 is if you have a fire, water damage, or other major disaster, the Insurance company could try to weasel out of the claim since the Insured is different than the recorded Owner.

I know a lot of folks on here QC to their LLC and roll the dice with the Due on Sale clause. I have four LLCs myself for asset protection, but I've never borrowed under my personal name and quit claimed to the LLC. The risk in doing so is much greater than the reward/protection, IMHO; however, I also have a $2.0MM Umbrella policy that probably affords me more protection than an LLC would or could in a situation similar to yours.