quit claim

[quynn]

Hello,

I have a question. I called a bank to refi. some of my properties into my LLC's name. They told me that if I quit claimed my properties into my LLC's name it would disappear from my personal credit report, therefore, reducing my debt to income ratio on my personal credit. Does anyone know if this is true?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[ChrisS417]

I'm curious to see what knowledgeable parties say about this.

Sounds too good to be true.

If it is true, my guess is it would reduce your debt to income ratio, but also your debt to equity ratio since the equity in those properties would also "disappear" from your personal balance sheet.

I'm probably wrong but,

Control everything own nothing...Right?:smx1:

 

[Diane Kennedy]

I'm almost positive that this is not true. You could follow up in writing "based on my conversation with xxx on xx, such and so is true" send it overnight, with receipt. Wait a week or two and then do it and when they don't take it off your credit, sue them. I've never personally done this, but I HATE when people on the phone have no accountability!

Also, a quit claim voids title insurance.

 

[Jill]

. . . Also, a quit claim voids title insurance.

OOoooooooo. I don't think I knew that! Thanks!!

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[kurtyordy]

also quitclaim could trigger DOS clause, however in the current environment it would be interesting to see if a bank would push this.

 

[reipro]

Qiut Claming the property to an LLC does not make the loan disappear from your personal credit. If this were true everyone in forecloseure would form an LLC and move the property over.

How a loan apprears on your credit report depends on how the loan was set up and how the mortgage company reports it to the credit agencies.

 

[tbsells]

I agree with everyone else. This person gave you really bad advice. If the mortgage is in your name, the debt is yours. It doesn't matter how the title is held.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Corrado79]

I second what everyone else has said and add that I do not think an LLC can take a mortgage out on residential property. I think business entities (LLC, Corp, etc.) can only take mortgages out on commercial property.

This may or may not be the law, but I believe it's, at a minimum, common lender practice.

 

[kurtyordy]

I second what everyone else has said and add that I do not think an LLC can take a mortgage out on residential property. I think business entities (LLC, Corp, etc.) can only take mortgages out on commercial property.

This may or may not be the law, but I believe it's, at a minimum, common lender practice.

actually, I believe it is considered a commercial loan regardless of the type of property. Typically the lending terms are worse, but that is about it.

 

[hakrjak]

One possible strategy to get a property off your credit report can only be done if you owe a smaller amount on the mortgage, and you are able to pay it off with a business credit card or line of credit.

Business CC's and most lines don't appear on your personal credit report, and are a good place to hide lots of debts.

I once had a cheapo $40k condo that I owed $30k on, and I paid off the mortgage with a business Visa at a very low fixed rate for using some convenience checks. Mortgage showed as paid off on my credit report. Balance of the business CC never showed up.

Cheers,

- Hakrjak

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[tbsells]

I second what everyone else has said and add that I do not think an LLC can take a mortgage out on residential property. I think business entities (LLC, Corp, etc.) can only take mortgages out on commercial property.

This is not the case. My LLC has several mortgages on residential properties.

If a business entity is obtaining a mortgage, it is likely for commercial purpose. The property may be commercial or residential property, but the purpose is likely commercial. For example, these properties are commercial in nature to me because they are income producing, and not my residence. I don't have my residence in an LLC, but there is no reason it couldn't be.

 

[Corrado79]

This is not the case. My LLC has several mortgages on residential properties.

If a business entity is obtaining a mortgage, it is likely for commercial purpose. The property may be commercial or residential property, but the purpose is likely commercial. For example, these properties are commercial in nature to me because they are income producing, and not my residence. I don't have my residence in an LLC, but there is no reason it couldn't be.

Yes, you are correct. I probably didn't properly explain what I was trying to say. I also have residential properties under my LLC's.

What I meant to say is that a business cannot buy residential properties with a residential mortgage. The mortgage will need to be in the individual's name if it's a residential mortgage.

Going back to the original post, I was trying to explain that simplying putting the property into an LLC will not mean that the individual is off the hook if the mortgage is going to be a residential one. If it's going to be a commercial mortgage, then that's different.