Is there any program out there that will lend to an LLC and NOT require personal credit info? We have a construction loan in the LLC currently that is going to expire and I’m having a hard time finding a way to refi the property to hold as a rental without using our personal credit. Doesn’t the use of our credit pierce the corp. veil?
Jennifer
p.s. not really intersted in over the top high interest hml’s to hold rental property for several years when there is already negative cash flow in my area.
No, giving a personal gurantee for a corporate/LLC loan does not pierce the corporate viel. The LLC remains the primary borrower on the loan and you are only providing a personal guarantee to facilitate the underwriting/approval. This is common lender practice.
Thanks. Many lenders in my area are saying that they don’t lend to the LLC’s at all…I’m in Oregon…and that all the members need to personally get the loan then deed it over to the company. I suppose if we HAD to go this route, we’d want to back it up with a promissory note and such?
I have run into the same problem: attempting to transfer a mortgage from my name into my LLC. Mortgage lender will not allow this to happen. Any advice?
There are lots of lenders who will lend and title directly to an LLC. they usually require a personal guarantee. But, you probably won’t find it at your local “bank”. They don’t think - only fill in the blanks on forms.
bcsmo: why tell them? as long as the loan is performing, I have never heard of a bank calling the DOSC for this reason.
Mark is correct, a bank will almost never exercise the due on sale clause as long as the loan is a performing loan. The exception to this is when a portfolio is audited (only a small percentage of loans in the pool are checked) or servicing sold. This is usually a quality control audit. The other thing that may cause you some heart ache is your insurance carrier changing your rates with the LLC conversion, especially if you are doing it for asset protection on your primary residence. They will try and treat it like a rental or a non owner occupied property.
One additional advantage of not using the warranty deed process is the title insurance issue, in the event of a future claim… Getting the loan directly in the name of the trust / LLC with the title insured in the entities name can save you a future battle.
Yes personal guarantees are required. Unless you have a well established corp/trust with substantial verifiable assets, and a Solid D&B rating, then you need no personal guarantee.
