I sent in a letter of transfer to my LLC to Countrywide and gave them 21 days to respond, should they disallow it. After 30 days a lady from countrywide called and stated that it was against Countrywides policy and they would not allow it. I have not transferred the property yet, but has anyone experienced something similar or has anyone with a countrywide loan transferred a property to their LLC without the Due on sale clause being evoked?
The is a perfectly performing loan and its kind of hard to believe that countrywide with the mess that their in now would purposely put a perfectly performing mortgage in jeopardy. But hey who knows weirder things have happened. An input from anyone with countrywide experience or similar would be greatly appreciated.
That’s what I have heard about Countrywide. They will not allow a transfer as a matter of policy. Maybe that will change with the BOA takeover. What happens if you do it anyway? How will they find out? It doesn’t matter as long as the loan in performing.
bll, I am thinking the same thing as you are, but don’t want to take a change by doing it and the loan being called. I have the deeds to transfer in my hands right now. I have to retain the property on my name for a rental property which may have liability issues in the upcoming years. I wish someone with some experience can provide a input.
You have a greater chance of being sued and losing than you do of having a performing loan called because title is held in an LLC. As for liability concerns, an LLC only provides the protection touted by the gurus if you use a property manager or don’t own the LLC. If you do all your own maintenance and management of the property, you can create a situation where you are personally liable for any injuries. An LLC protects nothing, if like most investors, your net worth is tied in rental properties. Real protection is going to take much more than an LLC. You’ll need some kind of combination of trusts and entities, which can get expensive very quickly.
BLL I completed agree with you and I know most gurus ad attorneys are hyping on LLC’s and Land trusts. Like my attorney friend tells me every-time he comes across a Land trust he sees a big bulls eye, an investor trying to hide assets! I just want a LLC transfer because I do not want my name floating around public records and an LLC provides some protection.
You might want to look at business trusts. They have some asset protection features and are much cheaper than an LLC. Remember that if you have a legitimate, not asset protection, reason for doing what you did (business planning, succession planning, tax planning, estate planning, etc), you won’t have any issues if you ever end up before a judge or jury. Ask any attorney who actually litigates and you will learn that appearances are what matter. If the jury/judge doesn’t like you or think you are up to no good, it will rule against you regardless of the facts. They follow the human instinct to do what they think is right and will interpret the situation to get the desired outcome. You want to make sure that outcome benefits you.
As to keeping your name out of public records, you need to buy in the name of an entity. When you buy in your name, you generate a public record.
Bll, what do you mean my trusts. are you referring to Family Limited Partnerships or family trusts? As far as my Countrywide situation goes, I have decided to hold off the transfer due to low market conditions, not because countrywide threatened to call the loan due. Due to the fact that if on a minute chance Countrywide is stupid enough to call the loan due, for me to refinance the property within 30 days maybe an expensive situation since the existing loan amount is 85%-90% of market value. Once the value go up a little where I would have 70-75% market value, I would not hesitate to transfer and test and see what Countrywide is really made of, which is bunch of bull I am sure.
I never heard of a family trust, but I am familiar with several types of trusts that have nothing to do with business ventures. I’m referring to plain old business trusts that have been used for a few hundred years. They are also called Massachusetts Business Trusts.
Avoid Family Limited Partnerships unless you have a real family business you want to pass to your children. They aren’t asset protection vehicle for personal assets. They are just overpriced limited partnerships. An LP can be a good choice if you want to remove assets from your taxable estate without giving up control of them.
I have a client that attempted to do that in December of 2007. Countrywide disallowed it then. Client tried again last month and Countrywide said they would allow it if they re-fi loan down to 65% LTV. Owner can’t do it, so no go.
if they “called” in response to the borrowers “written” request, does that count as “official” notification that they disallow it?
I generally operate in “if it’s not in writing, it doesn’t exist” mode.
I would argue that I gave them written notice, and did not receive a written disapproval, which implies approval. (I trust you sent it certified, so you have proof of receipt)
and even IF they discovered the transfer and IF they decided to follow up on it, it is likely that they would simply order you to transfer the property back rather than call a performing loan. CW is in a world of hurt right now. I don’t think they’d easily let go of a good loan.
Yes, I have certified and documented and no I do not believe that they would actually go ahead and call the loan unless they are complete morons. Funny thing happened just now I received a letter from Countrywide stating that my existing equity line of 5,000 which was unused has been stopped. So, I guess they are examining this loan since the notification of transfer. They really are complete morons. Once Bank of America guidelines are fully enforced in 2009, I will transfer it over to my LLC. I cannot afford to have a high liability rental under my name.
Yes, Countrywide are complete morons. Please don’t make me give you examples from our real life short sale operations just in the past 3 months. Don’t overestimate their intelligence or logic.
I see that Bank of America policy was compared against Contriwide in this thread. Are you all implying that Bank of America is good and will let you transfer your rental to your LLC names?
Please tell which bank allows and which one does not so I make sure to tell my lendor to only submit my loans to those who allow it.
Thanks,
jay
99.9999% of lenders will NOT allow transfer of title. This is even more so with a tight credit environment. However, a transer of title WITH a loan assumption by your LLC/Entity is possible as long as you have 30-35% equity in the property.
Sorry, I know it’s not encouraging, but credit markets are a nightmare without 65% LTV or better.
You’re too late. If the property is currently held in your name then it’s already a matter of public record. Even if you transfer it to another entity most title searches will disclose at least the last two owners. Both your name and the LLC will come up.
Why would this matter? The loan papers he signed already state that they disallow it and that they can call the loan if he transfers ownership. Why are they required again to confirm this in writing?
The real question is why would they add a performing loan to their growing collection of REOs. Lately, I think they have bigger headaches. Even during the good times however, the likelihood of a lender calling a performing loan is very small.
My questions was … What is Bank of America’s policy on title change to LLC? Are they more flexible then Countrywide? Has anyone approached Bank of America in recent days on this subject?