All Forum Posts by: Juan Lopez

@Juan Lopez as others have said, Fannie Mae changed the rules for transferring to an LLC under certain conditions. You will need to remain the majority owner and you retain 100% financial liabity for the loan repayment. The loan is still secured against the property title. When you go to sell or refinance the property, you need to transfer it out of the LLC back to your personal name.

As far as your stated goal of protecting your net worth, I am not sure what you are trying to protect from. Having a partnership where only one owner is legally responsible for the loan may not be the best business structure. In my opinion, you are better off applying for a business loan with the LLC, then signing a personal guarantee on the loan. This allows both you and your partner to be responsible and it builds a credit history for the LLC. You pay a little higher interest rate, but it is worth it in my opinion.

Rather than throw the word fraud around, I think it's best to go to the Fannie Mae Seller's Guide for the answer.  https://servicing-guide.fannie...
This topic contains information on allowable exemptions due to the type of transfer.

Unless the previous borrower requests a release of liability, the servicer must process the following exempt transactions without reviewing or approving the terms of the transfer:

A transfer of the property (or, if the borrower is an inter vivos revocable trust, a transfer of a beneficial interest in the trust) to

• Notes: For all such transfers affecting mortgage loans purchased or securitized by Fannie Mae on or after June 1, 2016, the transferee is not required to occupy the property.
  
• a limited liability company (LLC), provided that:
  • the mortgage loan was purchased or securitized by Fannie Mae on or after June 1, 2016, and
  • the LLC is controlled by the original borrower or the original borrower owns a majority interest in the LLC, and if the transfer results in a permitted change of occupancy type to an investment property, such change does not violate the security instrument (for example, the 12 month occupancy requirement for a principal residence).

  The servicer must notify the borrower that a property transferred to an LLC must be transferred back to a natural person prior to any subsequent refinance application in order to meet Fannie Mae's Selling Guide underwriting requirements.
  

The way I read it, you can transfer to your LLC. Looks like the original borrower has to own a majority interest in the LLC.

Hope that helps

Stephanie

@Juan Lopez

As of my understanding if you purchase a property under your name, you must live in the property for one year. If after one year you decided you wanted to buy a bigger home or a different home because you have to move area for X,Y, Z reason you can the. Rent your current property and buy a new one to live. Then you may convert the property as a rental. The home will always remain under your name because you must apply as an individual but you can create an LLC and claim the home in your taxes as a rental. If you're arbitrarily buying a home stating you'll live them but you want to them change it to an LLC then that's when you run the risk of the lender requesting you to buy back the loan. I hope this gives you more clarity.

P.S conventional allows you to have up to 10 houses infers your name doing this. And if you buy investment directly then it’s unlimited.

@Juan Lopez the title company I closed with processed a transfer deed on a multi-family I purchased a few months ago. I had to wait a month after close for the title insurance to finalize then pay about $100 to process the paperwork.