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#1976234 - 11/13/14 08:21 PM Primary Residence Loan with LLC owned collateral
tryin2comply Offline
Member
Joined: Jun 2013
Posts: 87
Scenario: Wife and husband create a LLC. Home purchased(by loan from mother), note and mortgage filed in name of the LLC (with husband and wife as only members). Now wife and husband want to refinance the home loan into their personal names, but keep the deed in the name of the LLC. As the Bank, I'm concerned because collateral isn't tied to the individual. Another concern is if the LLC's operating agreement (which I doubt exists) allows company owned assets to be pledged to secure the loan of the members. Do other banks do this? What kinds of issues have they encountered?

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#1976334 - 11/14/14 03:45 AM Re: Primary Residence Loan with LLC owned collateral tryin2comply
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 82,149
Galveston, TX
All legitimate concerns that you should sit down and discuss with your legal counsel.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1976352 - 11/14/14 01:56 PM Re: Primary Residence Loan with LLC owned collateral tryin2comply
tryin2comply Offline
Member
Joined: Jun 2013
Posts: 87
Thanks rlcarey!

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#1976353 - 11/14/14 02:02 PM Re: Primary Residence Loan with LLC owned collateral tryin2comply
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
Ask counsel how to structure the deal. First, it is not unheard of for an LLC to be used to hold property, even a home. Second, the individuals can and should be required to guaranty just as with a trust. Third, does your state require an operating agreement?
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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