Category: Fannie Mae/Freddie Mac

Have you ever heard of an “Non-Arm’s Length Transaction” in real estate? In most real estate transactions, a buyer and seller work the best deal they can for themselves. However, sometimes one of the parties has more power than the other, such as an employer selling to an employee, or a family member to family member.  When this happens, the lender may have rules.  If this sounds like your situation, let’s talk first!

Have you ever heard of an “Non-Arm’s Length Transaction” in real estate? In most real estate transactions, a buyer and seller work the best deal they can for themselves. However, sometimes one of the parties has more power than the other, such as an employer selling to an employee, or a family member to family member.  When this happens, the lender may have rules.  If this sounds like your situation, let’s talk first!

Related Article Title: Family Status and Non-Arm’s Length Transactions Question: Is a first cousin selling to their first cousin considered a non-arm’s length transaction? Answer: Yes, that would be a reasonable conclusion. The familial relationship is not always the sole indicator of a non-arm’s-length transaction as it could be between an employer/employee (think builder situation) […]

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Will home finance lenders allow legal/permitted “grow rooms” for marijuana? Unfortunately, because federal law still considers marijuana illegal, the normal federal outlets for home financing will not allow legal grow rooms.  However, they will allow W2 income from the cannabis industry.  If you are in the cannabis industry, let’s discuss your home financing options before you start looking for a home.

Will home finance lenders allow legal/permitted “grow rooms” for marijuana? Unfortunately, because federal law still considers marijuana illegal, the normal federal outlets for home financing will not allow legal grow rooms.  However, they will allow W2 income from the cannabis industry.  If you are in the cannabis industry, let’s discuss your home financing options before you start looking for a home.

Related Article Title: Legal Marijuana Grow Room Reported on Appraisal Question: My client’s property is in California and they have converted a bedroom into a marijuana grow room. The appraisal states that there is a permit, and that income is not being derived from this.  Will Fannie Mae or Freddie Mac accept this? Answer: I […]

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COVID Overlay – Proof of Retirement Liquidation

Question: Fannie Mae has a COVID overlay that states if you are using stocks or retirement accounts you must show liquidation. What is Freddie’s stance? For instance, do they allow for no liquidation when you have 20% or greater of what you need without proof of liquidation? Answer: Unfortunately, Fannie Mae and Freddie Mac align […]

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Legal Marijuana Grow Room Reported on Appraisal

Question: My client’s property is in California and they have converted a bedroom into a marijuana grow room. The appraisal states that there is a permit, and that income is not being derived from this.  Will Fannie Mae or Freddie Mac accept this? Answer: I went straight to Fannie Mae with this question and here […]

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Family Status and Non-Arm’s Length Transactions

Question: Is a first cousin selling to their first cousin considered a non-arm’s length transaction? Answer: Yes, that would be a reasonable conclusion. The familial relationship is not always the sole indicator of a non-arm’s-length transaction as it could be between an employer/employee (think builder situation) or other similar non arm’s-length situations. Both Fannie and […]

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