repldorsey

Bank Refusal to Issue Loan to Montana LLC buyer

18 posts in this topic

For the first time in 46 years of marriage and paying all of our bills on time and in full, today we were refused a loan by a bank. The reason: we have been full timers for 10 years and don't "live" anywhere.

It doesn't matter that we have excellent credit; recently paid off the loan for a 2008 Allegro Bus and are buying a gas model motorhome a fraction of the cost of the Bus. It doesn't matter that the IRS accepts our "address" as our permanent residence and the State of South Dakota accepts our mail forwarding service as our address for residency and for voting registration.

After talking to the Finance Manager at the dealership, I contacted John Bennett's office in Montana where I established an LLC four years ago before purchasing the Bus. Our attorney confirmed that the majority of banks in the United States will NOT fund a loan for a full timer because they can't "find" us if we default on the loan. Credit rating and payment history apparently count for nothing; this certainly is contrary to what all of us old-timers were told through our work years.

I wonder if other full timers have recently encountered this shocking policy (amazing how we're paying for the past sins of the lenders). Would love to know if there is a solution to our quandry. We are reeling from the shock and wondering what we are going to do now.

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There is nothing shocking about this. It has been well documented in the past. The bigger issue is the Montana LLC itself. The bank would be loaning money to the LLC and if the LLC defaults they have no recourse for collection from "you" the actual owner. The reason people create corporations and LLC is for the financial protection afforded by these entities. Before putting yourself into an LLC you will want to make sure you understand all of the possible repercussions. It's a great way to avoid paying taxes but there's more to it. In this case you will save LOTS of money on taxes since you are not going to be able to buy and RV!

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I would think (correct me if I'm wrong) that it is because of the LLC. Have you tried getting a loan in your name rather than the LLC using your "home" state mailing address where you are registered to vote? I know, that would mean you would have to pay taxes like the rest of us do......... but it may also lead to loan approval.

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Do you have any family that you can use their address as your home of record? A son or daughter? Then apply in your name only.

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It's kinda immaterial what address the OP uses. If the bank loans money on the coach, then they will have a lien on it and keep the title in their hot little hands. The Title will show the LLC as the owner, not the OP. After all, why have a LLC in Montana if it doesn't own the coach. There go the tax savings. It seems to me that the only way around this is for the OP to make a "personal loan" using some other asset such as stocks or such as collateral. A bank might buy that. Or just pay cash for the coach!

OBTW, State Farm claims that they will make loans to fulltimers, according to my agent in Livingston, TX.

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Do you have any family that you can use their address as your home of record? A son or daughter? Then apply in your name only.

Residency is established when your drivers license is issued and your registered to vote. At least that is the way it is in Oregon. They used to not care if you listed Oregon as home and payed no sales tax and $10 vehicle registration, but other states put the pressure on so they no longer allow it.

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Well my in-laws are full-timers and they have their daughter's home (my S-I-L), listed as their home of record, that is where there DL's are and that is where they are registered to vote. I imagine they pay NY State Tax on their taxable retirement income, as well.

So even though they are there for less than half the year, it seems to work out fine. And they are on their 3rd coach and never had an issue with a bank denying them because "they don't live anywhere".

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If you have good enough credit I would not think its a problem to get financing. I have know individuals that could get a loan with just their signature.

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Every month in the FMCA magazine, there is an advertisement from Essex Credit (www.essexcredit.com). Their advertisement indicates they specialize in motorhome financing. In fact, their current ad refers to a "RV Full-Timer financing program".

Maybe they can help; and we should all try to support FMCA's advertisers if possible.

Good luck,

Tim

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Tim,

Funny that you should mention ESSEX Credit. When we bought our current MH we went to ESSEX. They do not make loans per say. However they found us a great interest rate. When I told the dealer that we would be using ESSEX they were a little taken back. They did not know who they were and were reluctant at first. They did change their toon when they received the paper work from Wacovia now Wells Fargo. ESSEX got us 2% less then the dealer found and we got 1 17 year note. ESSEX is really nice to work with.

Also you and Beth have a great Thanksgiving and a Wonderful Christmas.

Herman

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Remember that this not an issue about personal credit. The issue is trying to get someone to loan money to an LLC and not the person with the great credit.

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Many rules for things like Loans, Drivers licenses, Titles, and domiciles, have changed in the last 6 - 12 months as the effects of the Real-id act come on stream. It is now more difficult to become a "Texan" through the Escapees organization than it was just a year ago. Still doable though. Such is the "Law of Unintended Consequences"!

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Have done more research since Friday and learned about the S.A.F.E. Act which took effect in January 2011 in response to 2008 meltdown of the financial industry. Apparently the Act requires banks to maintain an escrow account and collect property taxes and insurance from fulltimers who borrow to purchase a motorhome; it is a hassle for them so therefore they have chosen to discontinue to lend to fulltimers. it has nothing to do with whether the purchase is to be done within or without an LLC; it is the matter of deciding the state or local taxing authority of the fulltimer's address of record.

Spoke with the VP of Finance for Lazy Days and was told their only source of funding for full timers is Essex Credit. Spoke with Essex and they do not loan money to a Montana LLC, though they lend to other LLCs.

The net result is that those of us who, for whatever personal reason, have enjoyed the life full time rvers are paying dearly for the greed and mistakes of the financial industry. No longer will federal and state accepted addresses provided by mail forwarding services be accepted by the lending industry for the purchase of recreational vehicles. If you are a full timer without a "real" address and are considering upgrading to a new vehicle, please don't trust any dealer who tells you "no problem" in getting financing. I wish we had known this before expending the energy we did in locating a vehicle and the embarrassment of being told we were turned down by the bank. Tomorrow we will have a discussion with our dealer as to why his finance manager didn't know about this change, which took place almost 2 years ago!

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In addition to not getting a loan you may have a problem if you want to set up a brokerage account with no permanent address.

Homeland Security and the 9-11 laws that passed after to hinder money laundering and terrorism make it next to impossible to get many things without a permanent address.

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Actually, my Brokerage Account points to my Livingston, Texas address as our primary address. Maybe the broker doesn't understand Escapees addresses!

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Try Suntrust Bank. If nothing else, they do (or did 2 years ago) loan to Montana LLC's.

I do think not having a permanent real address is the problem though.

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repldorsey, on 16 Nov 2012 - 19:03, said:

For the first time in 46 years of marriage and paying all of our bills on time and in full, today we were refused a loan by a bank. The reason: we have been full timers for 10 years and don't "live" anywhere.

I recently had the same thing happen to me. We sold our coach and were prepared to purchase a new one but, the financing company would not finance our Montana LLC for the purchase. We had even put a deposit down on the purchase as we had never had a problem before this!

repldorsey, on 16 Nov 2012 - 19:03, said:

It doesn't matter that we have excellent credit; recently paid off the loan for a 2008 Allegro Bus and are buying a gas model motorhome a fraction of the cost of the Bus. It doesn't matter that the IRS accepts our "address" as our permanent residence and the State of South Dakota accepts our mail forwarding service as our address for residency and for voting registration.

We were also doing the tax avoidance through our Montana LLC.

repldorsey, on 16 Nov 2012 - 19:03, said:

After talking to the Finance Manager at the dealership, I contacted John Bennett's office in Montana where I established an LLC four years ago before purchasing the Bus. Our attorney confirmed that the majority of banks in the United States will NOT fund a loan for a full timer because they can't "find" us if we default on the loan. Credit rating and payment history apparently count for nothing; this certainly is contrary to what all of us old-timers were told through our work years.

The dealership we were dealing with gave us the run around stating that the financing companies are unwilling to provide a loan for a chattel. They said something that they don't give out chattel mortgages which we didn't understand what it meant. Were you told the same thing?

repldorsey, on 16 Nov 2012 - 19:03, said:

I wonder if other full timers have recently encountered this shocking policy (amazing how we're paying for the past sins of the lenders). Would love to know if there is a solution to our quandry. We are reeling from the shock and wondering what we are going to do now.

We are having a similar problem and we currently can't get our deposit back as we requested some upgrades that the dealership cannot take out of the motor home. We are currently without a place to live and are living between motels in the area while we try to figure out what to do! This is costing us more than the tax savings we actually would get I think now!

We don't have a lawyer and did our last setup and purchase without a lawyer. Did your lawyer provide you any additional information that would be helpful? Were you able to eventually get financing for your Montana LLC??

We are probably going to use our assets to purchase the motor home if we can't resolve the issue in the next few days.

Any tips you can provide on how you resolved your problem?

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This would be a good reason to attend an FMCA convention. There are numerous finance companies there that advertise the fact that they do finance LLC's

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