Historically, residential properties that were financed with Conventional mortgage loans and then transferred and held in an LLC by the owner was not recommended. If a borrower wanted to refinance a property that was held in an LLC, they would have to first transfer the title to themselves personally and then wait six months before the borrower could refinance the property. This was the rule that was imposed upon borrowers by both Fannie Mae and Freddie Mac when it came to properties being held in an LLC.
This six month waiting period, also known as a seasoning holdover, inhibited individuals to refinance who were trying to shelter their residential real estate assets that were transferred into an LLC. Basically, they did not have the option to refinance their property without this seasoning requirement being met.
That has now recently changed. In Fannie Mae and Freddie Mac’s most recent lending guideline revisions, they have updated this archaic rule which now allows borrowers to refinance without the need of the six month seasoning to pass.
If a borrower is a majority owner of the LLC, they do not have to take the property out of the LLC and wait 6 months before they can refinance it. In summary, Fannie Mae & LLC’s are learning how to play nice.
To get questions answered about your specific refinance or purchase, give us a call at (760) 930-0569. We are here to help you navigate the complex world of residential mortgage financing.
