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Fannie 5-10 with Commerical LOC

If I get a commercial line, cross-collaterized useing 6 condos (al Free and clear) and then apply for a 5th Fannie single family loan how would Fannie cosider the LOC? As 6 mortgages or 1? would they use the max avail line amount or the current balance (assoc payment) in their debt ratio calcs? Anything other Fannie issues this may create? The condos are worth about $1M, looking to get a $400-$500K line.Thanks by vlady1_626_887 from Rochester, Michigan. Nov 3rd 2012 Reply

William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions

The guideline regarding "Properties Financed" is just that... it's based on the number of properties with loans.. so you could have 5 properties with first and 2nd mortgages, and under FNAM, you could get another 5 properties.. but in your scenario, all 6 properties would be encumbered, so it would be considered as 6 not determine your ratios when you have LOC's, then they will calculate the payment as if you have the line maxed out.. also, the lender will need the condo questioner, and each lender has their own guidelines regarding condo's... they would be looking for ownership vs investor percentage, sufficient reserves, no pending litigation, etc... if the condo's don't pass the test, you won't get financing...I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714

Nov 4th 2012
Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,249 contributions

As William indicated, good luck doing anything securred by condo's - depending of course on the specifics of the development(s) where they are located. To make the approval process easier it would be preferable to finance the additional single family home before setting up the LOC. If it was already in place, not all lenders would consider the payment based on the full amount drawn, just as they would look at the current payment on a HELOC rather than the potential payment. They would likely amortize any current balance over a shorter period than is required for example if the LOC only required interest payments.

Nov 5th 2012
Mike Silkworth (msilkw_195_870)
#29 ranked lender in Michigan - 531 contributions

If you have a bank that is willing to give you a LOC on multiple units, you should be talking to them about your future home purchasing plans. As loan officers we are paid by writing loans - but we also need to be responsible in steering you in a different direction when appropriate. You may be doing this already, but you should have an accountant, commercial lender and probably an attorney that are talking to each other with you, to make sure you are structuring your Real Estate Portfolio correctly. You really want to coordinate all of these activities.

Nov 5th 2012
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