Freddie Mac announced a few days ago that they will no longer refinance any property that has been in an LLC for the past 6 months. This includes single family up to 4-plexes.

Freddie Mac and Fannie Mae, both government agencies, own 90% of all loans, both conforming and non-conforming.

May 16, 2008, The New York Times reported an article by Chris Wallen that Freddie Mac had announced huge losses for the past quarter of $1.3 Billion dollars. They are using accounting methods to minimize the losses and effects. Fannie Mae also announced $151 million loss for the first quarter.

They plan to borrow $5.5 billion and that they will both be solvent by the end of the year.  Investors are buying into this idea because they believe the federal government will bail out their own lenders so they will remain solvent to prevent a further slump in the housing market.

 Freddie Mac also announced that they expect to see a $7.5 billion loss from bad loans over the next 2 years, so we have not seen the full extent of the effect of these losses yet.

Fannie Mae will be following the same guidelines regarding refinancing their loans in the near future.

This will greatly impact investors who plan to refinance to leverage their money in their investment properties.

There is a new strategy called the Sandwich Trust which involves 3 steps:

     1. Putting your property in a Living Trust, to avoid probate

     2. Then putting it into an LLC in your name where the value and net worth is in the LLC

     3. Then putting it into another Living Trust for asset protection

This method is accepted in all 50 states and completely protects you against probate and protects your assets as well.

There is a lot of paperwork, notices, recordings, etc. which you could do yourself after some studying on  the specifics, and an attorney versed in this method could be of considerable help.

This information came through an email this morning from Diane Kennedy.