All Forum Posts by: Jesse Gonzalez

@Erik Trefzger

- if the seller financed note is in my name, it does not help me get over the ten property limit, unless I am already at ten properties.

Answer= Correct

- if the seller financed note is in my LLC's name (even though my LLC is a sole proprietorship), it does not count against my Fannie/Freddie limit, and I can use owner financing to eventually own more than ten properties (yet finance the full ten Fannie properties), even if I own less than ten now.

Answer= LLC's are subject to the limitation, corporations are different. Joint or total ownership of a property that is held in the name of a corporation or S-corporation, even if the borrower is the owner of the corporation and the financing is in the name of the corporation or S-corporation are not subject to the limitation. If the financing is in the name of the individual, but ownership is held in the corporation then the limitations apply.

@Erik Trefzger

1. Fannie Mae / Freddie Mac count the total number of mortgaged properties against your 10 property limit, not just Fannie/Freddie backed loans.

Answer=The financed property limit applies to the borrower's ownership of one- to four-unit financed properties or mortgage obligations on such properties and is cumulative for all borrowers. These limitations apply to the total number of properties financed, not to the number of mortgages on the property or the number of mortgages sold to Fannie Mae. Unless otherwise stated, these requirements apply to all mortgage loans whether underwritten manually or through DU.

3. I don't see how I can add a private mortgage to my portfolio and not have it count against my limit, thus reducing the number of Fannie/Freddie loans I can get by one.

Answer= there are exceptions, if the property is over 4 units the max number of financed properties does not apply, if the property is commercial it does not apply, and if the ownership is corporate and the corporation is liable for the note, not the individual, it is not under the max property restriction.

4. Should I just wait until I hit the 10 property limit before pursuing any seller financed deal?

Answer= It depends on your personal situation and long term goals.

If you utilize fannie mae's delayed financing program you can get a maximum of 70% cash out, assuming you fall under all of the delayed financing criteria.

Delayed Financing Exception

Borrowers who purchased the subject property within the past six months (measured from the

date on which the property was purchased to the disbursement date of the new mortgage loan)

are eligible for a cash-out refinance if all of the following requirements are met.

1. The original purchase transaction is documented by a HUD-1 Settlement Statement,

which confirms that no mortgage financing was used to obtain the subject property.

(A recorded trustee's deed [or similar alternative] confirming the amount paid by the

grantee to trustee may be substituted for a HUD-1 if a HUD-1 was not provided to the

purchaser at time of sale.)

2. The preliminary title search or report must confirm that there are no existing liens on

the subject property.

3. The sources of funds for the purchase transaction are documented (such as bank

statements, personal loan documents, or a HELOC on another property).

If the source of funds used to acquire the property was an unsecured loan or a loan

secured by an asset other than the subject property (such as a HELOC secured by

another property), the HUD-1 for the refinance transaction must reflect that all cashout

proceeds be used to pay down, if applicable, the loan (unsecured or secured by an

asset other than the subject property) used to purchase the property. Any payments on

the balance remaining from the original loan must be included in the debt-to-income

ratio calculation for the refinance transaction.

Note: Funds received as gifts and used to purchase the property may not be

reimbursed with proceeds of the new mortgage loan.

4. The new loan amount can be no more than the actual documented amount of the

borrower's initial investment in purchasing the property plus the financing of closing

costs, prepaid fees, and points on the new mortgage loan (subject to the maximum

LTV/CLTV/HCLTV ratios for the transaction).

5. All other cash-out refinance eligibility requirements are met and cash-out pricing is

applied.

Note: Investor and second home borrowers with five to ten financed properties are

ineligible for cash-out refinance transactions unless all of the delayed financing exception

requirements listed above are met. Additional restrictions apply. See B2-2-03, Multiple

Financed Properties for the Same Borrower.

6. The original purchase transaction was an arms-length transaction.

I'll chime in, I'm a mortgage broker and the first thing I tell people to ask is for a copy of the rate sheet that the loan officer is pricing the deal on. That will give you the skinny right then and there. Anybody not willing to show you their pricing and explain how it works is trying to hide something from you.

@Russell Ponce

"How do you highlite the @name function?"

You just place the @ symbol with the name of the person behind it and you'll see the persons name come up on the bottom of the screen and you click on it and the highlight function will occur.

Thanks for sharing your experience, I think there's a lot of "lessons learned" in what you went through and now you'll be way more prepared for something like it in the future. I'm in Santa Rosa too and I went through a nightmare deal out at the river one time. Your story brought up some memories I prefer to forget :)

@Bill Schrimpf Sure they can, if they aren't selling to fannie and aren't underwriting to those criteria.

@Mark Ferguson Thanks for asking me to clarify, the loan to value restrictions are for conventional loans, not FHA, I didn't clearly break that down in my original response.

@William Donaldson Another thing I totally didn't address with you is the fact that you'll only be saving 265 per Year but the cost is 2700. That would mean that you recoup the cost in 10 years, typically you only want costs that will recoup in 3 years at the most so I don't see the benefit to you there.

That has to be bank specific, nothing regarding rapid acquisition in the fannie selling guide. Find a broker and they'll help you out.