Anyone been able to refi a hard money loan on 5 or more properties with the new FNMA rules? Can this be done?
If you meet the credit, income, and asset criteria a rate/term should be possible.
Most investors cant meet the income requirements because you need 2 years of tax returns for all properties.
If ur doing commercial loans in an LLC than the FNMA property limits don’t apply
From all the new info I’ve been reading, this only applies if the actual loans are in the business name and titled to the llc.
For example, if a small local bank does a “non conventional” commercial style loan this will be made to the personal name unless the investor has a business with tax id. Then the loan can be done in the name of the business and it will be reported to the business. This can then be left off the application when applying for conventional financing.
If the loan is done in the personal name with title being in the the llc, then these must still be placed on application.
If the properties are owned by a corp, then they do not need to be counted, regardless of the financing.
I probably should have been more specific, but yes, I was referring to getting the financing AND title in the name of the company, therefore not having to worry about the FNMA prop limits
Well, I don’t think anyone has done one yet, but as far as 2 years of tax returns for all properties I think that just means you have been an investor for 2 years experienced in owning properties. For instance if you finance an investment property and you have 4 properties, that doesn’t mean you have to wait 2 years to do another property, think about it. The reason FNMA changed the rules was to allow investors to purchase foreclosures in this glut of properties. I don’t think anyone knows for sure.
not exactly correct. 2 years tax returns are for documenting rental income. If you’ve owned the property less than 2 years (meaning it doesnt show up on the last 2 years sched E) you cant use the income. All of the mortgage payment debt will make your dti high.
Sorry IL, but I will have to disagree with you on this. FNMA does not say you must own a property for 2 years. The first sentence of the requirement says you may even use the subject property you are financing or refinancing with documentation that has NO seasoning.
"Rental income on the subject investment property must be fully documented according to the Selling Guide, Part X, 402.24: Rental Income. Rental income from other properties owned by the borrower must be supported by two years’ federal income tax returns. "
If they are counting the subject property with a lease agreement then I am sure they are counting all other properties, think about it. They want 2 years tax returns for documentation but they don’t say you must own each property for 24 months. Like I said though, everyone has a different opinion, but look at the first sentence.
Here is another brokers interpretation that I agree with:
“Rental income on the subject investment property must be fully documented.
(Rental income from other properties owned by the borrower must be supported by two years’ federal income tax returns) I am not sure how they will deal with purchases that were made after your tax return was prepared though…”
You can own the property less than 2 years but if doesnt show up on the 2nd years tax returns you wont be able to use the income.
This means that any property purchased after December 31, 2007
can not be used for income.
Subject property income can be used calculating 75% of gross lease.
So here is IL’s logic, you can own a home for 1 day with a lease agreement and use the income but not any other one that you own for less than 24 months. What?
I have not found any sources to back IL’s interpretation. Everyone else says you use rental income with 2 years of tax returns, that does not mean that you have to own each property 24 months, nor does 9-02 say that. Rental income is calculated pretty much the same in all banks with only minor variations. We all know that.
You’re missing this and over complicating things.
Look at your own quote printed from Fannie. There’s two parts to it.
1st part covers subject property income. Says you can use income as normal. See Part X, 402.24.
This means lease income can be used to off set mortgage payment.
2nd part covers “other” property income. It does not say to use the normal guidelines from Part X, 402.24. That would only apply if your subject property was #2-4.
If your subject property is #5-10 those were given much tougher qualifications. As you’ve clearly copied and posted:
“Rental income from other properties owned by the borrower must be supported by two years? federal income tax returns.”
This means you MUST HAVE 2 years of tax returns to use any income for properties 2-9 that are rental. Simply put…If your rental properties don’t show up on both the 2007 & 2008 sched E then they are NOT SUPPORTED and rental income can’t be used.