The Trust Sandwich(tm) teleseminar has been downloaded now over 1000 times. Wow. That maybe a record for just a few days up on its new site at Trust Sandwich. I’ve had a couple of questions, though, that I want to address. First, a few people have asked me why their real estate agent or attorney doesn’t know about that. I don’t know why they don’t know about it.
A few have additionally asked for the cite to the IRS Code or new law related to this. This is regulation that is put in place by Freddie Mac. It’s a rule on how they operate. Congress didn’t vote on it and it’s not part of the IRS. It’s just the rule they have on who can borrow.
But, to make it all easier, Freddie Mac has issued a statement. Well, I think it makes it easier. You decide for yourself. Here’s what they have to say:
“We are revising our requirements for Investment Property Mortgages to reduce the number of financed properties in which a Borrower who owns more than one financed Investment Property may have an individual or joint ownership interest (including the subject property) from 10 to 4. Also, effective for Mortgages with Freddie Mac Settlement Dates on or after August 1, 2008, the Borrower on a cash-out refinance Mort- gage must have owned the subject property for at least six months prior to the Note Date of the new refinance Mortgage.” – Freddie Mac
A couple of additional points from the statement. Although the Freddie Mac underwriters I’ve heard from are all making this rule effective now, it’s really not effective until 8/1/2008. The point on the “must have owned the subject property…” means no title changes. Since Freddie Mac loans to individuals (not LLCs) the typical strategy is to distribute out of the LLC for refinancing and then put the property right back into the LLC. That’s what you can’t do anymore.