All Forum Posts by: Joe Bruck

My wife and I are in MD too and we have talked to several outside CPA's, the one we are going with is in NY. We don't mind that they are outside of the state since we found him through BP. Hope this helps.

@Joe Bruck I am very sorry that you ran into this.  I need to write an entire article on what I am about to tell you but you ran into something that the lending world calls an "OVERLAY".  An overlay is an extra rule that banks put ON TOP of Fannie/Freddie loans to make themselves more conservative on their lending.  I know, I know, the bank didn't TOLD you it was a Fannie/Freddie guideline...and that's how front line Loan Officers are trained to respond.  Chances are your Loan Officer doesn't even know what an overlay is.  And it's not their fault so don't take it out on them.  I was new once too and this is exactly how I was trained.  But overlays exist and there can be lots of them.  The rule that they referenced is not a Fannie/Freddie guideline.  Again, very sorry you had this happen but we've all been through it before.

For the most part, large banks are out for us as investors.  If they are publicly traded....just don't even try.  Too many overlays.  And that's why most investors work with small banks.  The smaller the bank the less chance of hefty overlays.

Now it's hard to know what questions to ask to find out what overlays banks have so I compiled a list that does help you find out if they can work with investors:

Questions for Lenders

1. When do you start using rental income to help me qualify? (the answer needs to be immediately)
2. How long do you need me to be on title to refinance? (this is important if you do need a short term loan to purchase then refinance out - and the answer should be 1 day...very important that it is 1 day on title is all that is needed to refinance)
3. What is my minimum down payment required? (if they only require 15% down on a single family home that is usually a good sign that you are working with a flexible lender)
4. Can I change title to my LLC?
5. Do you sell your mortgages?
6. What is your loan minimum?
7. Can you explain to me what your reserve requirements are?

Feel free to tag me with anything additional.  Good luck!

@Joe Bruck  Arms length is not just blood.  As I mentioned before it is super gray.  

below is right from the Fannie Mae selling guide

Non-Arm's Length Transactions 

Non-arm's length transactions are purchase transactions in which there is a relationship or business affiliation between the seller and the buyer of the property. Fannie Mae allows nonarm’s length transactions for the purchase of existing properties unless specifically forbidden for the particular scenario, such as delayed financing. For the purchase of newly constructed properties, if the borrower has a relationship or business affiliation (any ownership interest, or employment) with the builder, developer, or seller of the property, Fannie Mae will only purchase mortgage loans secured by a principal residence. Fannie Mae will not purchase mortgage loans on newly constructed homes secured by a second home or investment property if the borrower has a relationship or business affiliation with the builder, developer, or seller of the property