10 rental property loan limits - Posted by angie

Posted by Angie on July 13, 2002 at 16:24:18:

Thanks, JT-IN, that helps.

10 rental property loan limits - Posted by angie

Posted by angie on July 13, 2002 at 09:09:21:

I have posted a question on the financing forum, but to no avail. Has anyone else run into the 10 loan limit problem? I have been told that you cannot have over 10 mortgages on rental and homestead. This is new to me. When did that law get past and what communist past it?

Does anyone know how to get around it?

Please help.

lender policies are not laws - Posted by Brian M. Powers(MI)

Posted by Brian M. Powers(MI) on July 13, 2002 at 10:20:18:

this is merely a new FNMA policy for investor, non-owner occupied loans. usually when FNMA does something its only a matter of time before all the big lenders follow suit.
But this only applies if your bank is selling off your note.
These are not communist laws, just policies.
There are a gazillion loan programs out there these days so fear not…Stalin has not taken over the world of creative real estate.
BMP

Re: 10 rental property loan limits - Posted by Frank Chin

Posted by Frank Chin on July 13, 2002 at 09:57:10:

Hi Angie:

I believe these are policy limits imposed by individual financial institutions. The purpose is to limit losses due to one particular customer, if they choose to keep the loans.

If the loan is sold, I do not believe FNMA presently have any such limits. They have a five loan per borrower limit some years back.

This is particularly true of smaller banks. If they have no such limit, before long, some REI may owe 100K each on 100 houses, and owe the bank $10,000,000.

For large commercial borrowers, banks limit this risk by syndicating loans (splitting the loan with a group of banks), or selling the paper outright. But the larger fees make the work worthwhile for these large loans.

But in the case of a 100K mortgage, I couldn’t see the banker doing all this work. It would be simpler to tell you to take a walk to another bank, rather than for him to do all the work, and then selling your mortgage. Putting a 10 or 20 loan per borrower limit is in effect telling you to go somwewhere else.

Now if you were a major client, and I’m a banker with a policy of limiting 20 loans to a client, I would probably do the loan to keep you happy, and then quietly sell it to the bank down the street, to keep the loan committe happy.

Hope this helps.

Frank Chin

Re: 10 rental property loan limits - Posted by Mark Owens

Posted by Mark Owens on July 13, 2002 at 09:56:47:

I belive that those rules are for Fannie Mae and don’t apply to banks that keep their loans in-house or to private lenders.

Re: 10 rental property loan limits - Posted by jeff

Posted by jeff on July 13, 2002 at 09:29:47:

i posted a similiar post in the financing forum a few months ago.

i got a reply from a woman that happens to be a broker and this is the site i got in return. they do 20 loans supposedly.

www.filamgroup.com

Re: lender policies are not laws - Posted by Angie

Posted by Angie on July 13, 2002 at 16:19:47:

Can you tell me a lender that will make us another loan for non occupied property, please?

Re: 10 rental property loan limits - Posted by Angie

Posted by Angie on July 13, 2002 at 10:13:28:

Thanks for the post,Frank, but that isn’t the case. My loans are with all different institutions. A broker told me yesterday that it is the 10th loan that seals your fate. It is a FNMA policy, but all the banks are using the guidelines, too. Wells Fargo has the same policy. Bank of American has the same. Colonial Savings, also. I’ve been told to get a commercial loan at a local bank, but that sounds like a lot of trouble to buy a duplex or triplex. Also some local banks won’t make commercial loans for duplexes and triplexes. What’s a girl to do? How can I buy more assets without making loans? I have 750K in equity in other rentals.

Re: 10 rental property loan limits - Posted by Angie

Posted by Angie on July 13, 2002 at 10:14:45:

Thanks for the follow up, Mark. Please refer to my post back to Frank’s message.

Re: 10 rental property loan limits - Posted by JT-IN

Posted by JT-IN on July 13, 2002 at 11:11:08:

Angie:

You need to be working with a Commercial Loan Dept who realizes the limitations of FNMA. They will make you a comm’l loan, that is not sold to, or made under FNMA guidelines. Of course the interest rate is a point or so higher for the added risk, and inability to package the loan to FNMA.

Small to medium sized banks are good for this…

JT-IN