I am being told that Liveaboard Boats loans are now impossible

[weavis]

Originally Posted by TacomaSailor

Have other folks who wanted a live aboard loan with no shore side residence also been turned down in the last two years?

Its not relevant. There is a basic requirement that has been outlined for you. After that it is down to individual circumstances and liquidity.

If as you state, you had the CASH to put into a private account to match the loan, a bank manager would not be impressed over much. You can never use that money so why not just purchase the vessel with it?

Or if as you state, you had assets to place against the loan for the value, then the bank deemed them not secure enough to do the deal. You did not make a clear distinction as to which 'security' you were offering, but in either case, you did not satisfy the basic requirements for a loan.

It is a little unsettling to see a man of your financial acumen making so many basic errors in knowing how the lending market works. You could have formed a trust with an address. you could have........ never mind, Im no genius when it comes to investment but I did live in the States for 12 years and have a working knowledge of the system........ At the end of the day your not a viable candidate for lending money to under certain circumstances. Its not personal, its business.

At this point, Im wonder which part of "No, we are not lending you the money" your not getting.

Pony up cash, stay with what you have got or find another way. Thems the choices.

Said with respect.

[ericoh88]

Originally Posted by TacomaSailor

[I]Is every full time live aboard boat cruising in the Bahamas, Caribbean, and Mexico owned outright by the captain and their mate?


Have other folks who wanted a live aboard loan with no shore side residence also been turned down in the last two years?

Many sailboats owners either cruising the world or liveaboard in marina that I know, they purchase outright without loan. I remembered one French boat in Sebana Cove, Johor, Malaysia was impounded by the European bank for defaulting the boat's payments.

A Norwegian couple liveaboard on a double ender, whom I know (because I spent a week cruising in Thailand/Langkawi) who used to live in Hong Kong had a lot of problems with residential address so they named their boat, "32 Acadia Avenue"

[TacomaSailor]

I am sure this post will not make many friends for me but I just have to comment.

Forums like this one are funny places.

I describe a basic situation:

- we moved out of our long time shoreside residence 13 months ago
- we apply for a big boat loan
- the loan is approved
- the loan company figures out our address is really a boat in a marina
- the loan approval is withdrawn
- we tell the company we will get a shore side address
- the loan is approved
- we ask the loan company if we can go cruising
- we are told "no loan if you leave the US waters for more than six-months a year."

I come here and ask if anyone has had a marine mortgage approved under the following circumstances:
- full time live aboard with no shore side address
- full time cruising outside the US

Only ONE person has responded to my two very simple questions

Other responders have
- debated the legality of lying to the lender
- suggested we leave the US thus violating the terms of the loan
- criticized me for having too much money making too big a return in tax free investments
- criticized me for not thinking ahead
- criticized me for not having a shore side residence
- suggested we move back ashore
- suggested we purchase an inexpensive shore side residence
- suggested we ignore tax consequences and pay cash
- told me why a moveable asset like a boat is a bad risk
- told me that boats depreciate
- told me that boats can sink or be wrecked

All of those responses are fun to read but they really don't help me with my basic question. What I now know, based on this thread and more research I have done while talking to loan brokers, marine lenders, CPAs, tax attorneys, marine law attorneys is

- current US regulations require a full time live aboard marine mortgage conform to all residential lending requirements
- lying on a residential loan application is a federal felony
- lenders and prosecutors are now much more inclined to pursue those who make false statements on their loan applications
- lenders really demand a shore side residential address
- that address can be a rental (which seems to me is of little value to the lender because that rental provides no security for the lender)
- IF we had a shoreside residence we could borrow twice what we are asking for
- IF we had a shoreside residence our deferred compensation assets would be sufficient security
- We must pay cash IF I want to conform to current regulations and laws and not have the encumberence of a shoreside property
- OR find a seller who will carry the paper for four years and make three balloon payments, thus keeping our annual marginal tax rate at an acceptable level

Thanks to all who took the time to respond and provide a lot of interesting information and a special thanks to Dulcesuenos for actually answering my question.

[weavis]

Originally Posted by TacomaSailor

I am sure this post will not make many friends for me

What I now know, based on talking to loan brokers, marine lenders, CPAs, tax attorneys, marine law attorneys* is ----------------SNIP---------------

*Those are the people that gave you the legal advice.

Guess what? Some of the people here on this board are ALSO in those professions and the FREE advice right from the start was NO! you cant do it the way you want. It was very clear.

Being pedantic about the precise answer to a question, in the manner for which you dictate the course of the conversation has not paid off. The bottom line is NO! you cant do it in the way you want. It was very clear.

It matters not if some have obtained a loan in the past and been liveaboards, the details of how to get a loan were described, and its not for me or anyone to ask HOW they obtained a loan in their circumstances........ the facts remain that NO! you cant do it in the way you want. It was very clear.

I have found that in life generally, if a certain course of action is required, its always best to pay a professional for the information necessary to implement it or be told that it is not really straightforward unless x or y is in place or certain information should not be shared.

I dont know you well enough to be your friend or otherwise, however, in reading your posts regarding financials.......... I can only hope we find another subject we can have a mutuality about....... perhaps even sailing?

with best wishes for your plans for the future.

[Scot McPherson]

Tacoma,
Dude, there is a difference between getting good information and liking it.


It's quite simple, regardless of whether this answers your specific question or not, but does answer the larger issue which you are trying to dodge (understandably since you have a goal). It is this:

everything you have posed to the banks is too risky for them to accept.

It's as simple as that.

1) sole liveaboard: being your primary residence, you are granted protections from collections. You will have to be foreclosed on. Which....


1a) gives more a longer opportunity to run away with the asset.

1b) no physical address to send certified mail or send the Marshall/Sherriff to serve you.

2) going overseas: risky for bank, but coming home as a touch base for 6 months each year lets the bank see you and touch the boat (the liability) and...

2a) you can't be served papers if you don't come home regularly. Which...

2b) see 1b.

3) having the money but unwilling to use it and putting the risk in the bank actually increases your riskiness. Since it's quite clear you can more than afford the purchase, why are you asking them to assume the risk? It's a good question for the bank to ask especially since all of part 1 and part 2 are already very risky. It's suspicious.

4) buy the damn boat yourself, avoiding the luxury tax when indeed this IS a luxury is rather a spectacular example of just trying to beat the tax codes. You bought the boat but don't want to have to admit it to the IRS.

Maybe you ought to consider asking a tax lawyer if buying the boat can count as buying a house. That would be a transfer of your investment rather than a withdrawal from your investment accounts. But talk to a tax lawyer first.

Either way though, you are going to find life difficult in the USA if you don't have a permanent address. Seems you are entrenched in the American way, and so you are going to find it difficult to do life differently without the penalties.

[TacomaSailor]

"Guess what? Some of the people here on this board are ALSO in those professions and the FREE advice right from the start was NO! you cant do it the way you want. It was very clear. "


"Dude, there is a difference between getting good information and liking it. It's quite simple, regardless of whether this answers your specific question or not, but does answer the larger issue which you are trying to dodge (understandably since you have a goal). "

I guess we are subscribing to two different threads then...

I brought no "larger issue" to this thread. I have a 40 year history of investment and tax strategies and tactics. It has worked very well for us and let me retire at age 52. It is entirely possible that my strategies and tactics are not what others might do and may not even be the best possible. But, they work for me, I am comfortable with them, and this old dog is not looking for new tricks.

One respondent described getting exactly the loan I am looking for from one of the lenders I talked to. That was very useful information and was just what I expected when I asked the question initially. Dulcesuenos says they did get a similar loan so I need to determine what they did or said that was different than what I did or said.

I have been a fairly serious financial investor, real estate investor and slum lord, and participant in many LPs and similar deals. I was not asking for investment advice, tax advice, or legal advice. I have many professional advisors who can sort the issues raised here. And, in fact much of the advice here is factually and legally erroneous and probably dangerous.

ALL I wanted was to know if anyone had actually accomplished what I was trying to accomplish. TWO of the 45 responses answered my questions and provided the information I was seeking. That is why I say forums are funny places.

It is time for this thread to come to a not so graceful end.

[Scot McPherson]

Right so you are just looking for evidence to support your position.

[ssanzone]

Originally Posted by jacob30

This law is a part of the Frank- Dodd act from what I understand. What a bunch of crap it is. There nothing that says your situation can't change after the loan


Sent from my iPad using Cruisers Sailing Forum

this is IT right here!

you are securing a loan... there is no review of said loan year after year...

if the loan requirements are 6 months of residency + credit+ down payment + proof of income to secure the loan... do whatever u need to meet those requirements.

and then... sell the house, quit your job and sail away and make your mortgage payments from wherever u r in the world.

i bought bought my house as a primary residence 20 years ago. it is no longer a primary residence and i am not working for the same company and i was retired for 2.5 years of the last 20 years.

the bank gets their money. homeowners get their money. taxes get paid.

re-read the terms and determine if there are post closing requirements.

you are totally over thinking this.

the rules / requirements are black and white (for whatever reason). follow the rules to the black and white letter and be done with it.

if you can not secure 6 months of history and / or dont have the credit and or dont have the down payment and /or cant pat your head and rub your stomach pay cash or give up on this idea.

this is REALLY not a big deal at all as it is all binary.

-steve

[socaldmax]

I'm really sorry to hear you haven't been able to find a lender to finance a boat for you to liveaboard.

Based on your illuminating financial advice in the retirement advice thread, I got the impression that you were a financial expert and that you had done extremely well in mutual funds over the last 33 yrs.

I'm not surprised that lenders aren't willing to finance a floating, sinkable, globally mobile, depreciating asset, I wouldn't either. If I may offer a bit of financial advice...

try and live within your means. Financing a depreciating asset is never a good idea unless you truly have money to burn. I plan on paying cash for a used $200-225K cat in about 5 yrs, with enough investments to provide about $55,000/yr in income with no risk of loss. But I'm no financial expert.

Good luck!

[valhalla360]

"Forums like this one are funny places."

You got that right.

People post stuff they know the answer to and then get all passive-agressive when people tell them the answer they already knew and then really get upset when people take the extra step to try and help them solve the underlying issue by offering other suggestions.

[sailorboy1]

Originally Posted by Scot McPherson

Tacoma,
Dude, there is a difference between getting good information and liking it.


It's quite simple, regardless of whether this answers your specific question or not, but does answer the larger issue which you are trying to dodge (understandably since you have a goal). It is this:

everything you have posed to the banks is too risky for them to accept.

It's as simple as that.

1) sole liveaboard: being your primary residence, you are granted protections from collections. You will have to be foreclosed on. Which....


1a) gives more a longer opportunity to run away with the asset.

1b) no physical address to send certified mail or send the Marshall/Sherriff to serve you.

2) going overseas: risky for bank, but coming home as a touch base for 6 months each year lets the bank see you and touch the boat (the liability) and...

2a) you can't be served papers if you don't come home regularly. Which...

2b) see 1b.

3) having the money but unwilling to use it and putting the risk in the bank actually increases your riskiness. Since it's quite clear you can more than afford the purchase, why are you asking them to assume the risk? It's a good question for the bank to ask especially since all of part 1 and part 2 are already very risky. It's suspicious.

4) buy the damn boat yourself, avoiding the luxury tax when indeed this IS a luxury is rather a spectacular example of just trying to beat the tax codes. You bought the boat but don't want to have to admit it to the IRS.

Maybe you ought to consider asking a tax lawyer if buying the boat can count as buying a house. That would be a transfer of your investment rather than a withdrawal from your investment accounts. But talk to a tax lawyer first.

Either way though, you are going to find life difficult in the USA if you don't have a permanent address. Seems you are entrenched in the American way, and so you are going to find it difficult to do life differently without the penalties.

I know it isn't you first day on the forum :-)


Sent from my iPhone using Cruisers Sailing Forum

[Niagara Les]

Originally Posted by TacomaSailor

We currently liveaboard and have done so off and on for the last 14 years. During about 10 of those years we also had a shore side address at the small apartment we kept. In August 2013 we moved out of the apartment and committed 100% to the boat.

We are now trying to purchase a much larger boat for our long term live aboard and cruising home. We used a Nordhavn 46 (high quality, big production volume, good sales history, excellent value retention) as the potential boat to purchase.

In the last week I have talked to three marine mortgage companies (Key Bank, BofA, and Essex) with whom we have a strong history. I have also talked with four Marine Mortgage brokers.

I previously asked a similar question (http://www.cruisersforum.com/forums/...at-132592.html) when I thought the issue was not being able to find comparable values for the potentail purchase.

I called the mortgage folks back and said, "OK - no custom boat - we want to purchase a production boat with a long history."

ALL was good and the loan was on the table until
- live aboard
- non-US cruising

came up, then the loan was snatched off the table and here I am.

Is every full time live aboard boat cruising in the Bahamas, Caribbean, and Mexico owned outright by the captain and their mate?

The brokers and lenders have all told me the EXACT same story: A marine mortgage for a liveaboard boat that is the only residence for the inhabitants is almost impossible to make in the current lending environment.

The fact that we also want to go cruising on the boat, outside the US, for up to five-years makes it absolutely impossible for anyone to lend us money for that boat purchase.

We offered to put 30% down and to maintain a separate bank account with the full value of the remaining mortgage in it for the lenders protection.

We were repeatedly told that Dodd-Frank financial reform and consumer protection was the cause of the problem. That bill was signed into law almost four-years ago.

A white-guy problem classic, for sure.

Sorry, I couldn't help myself, just a bit of comic relief...

[socaldmax]

Originally Posted by valhalla360

"Forums like this one are funny places."

You got that right.

People post stuff they know the answer to and then get all passive-agressive when people tell them the answer they already knew and then really get upset when people take the extra step to try and help them solve the underlying issue by offering other suggestions.

You should see how obnoxiously aggressive he was in disputing opinions that he didn't agree with in a retirement advice thread.

http://www.cruisersforum.com/forums/...ce-132458.html

There, he claimed 33 yrs of amazing financial success managing his mutual fund investments(I thought that's what mutual fund mgrs got paid tens of millions to do??) and in this thread he's claiming 40 yrs. I'm not sure what to believe any more.

I certainly wouldn't take financial advice from someone who had to finance a depreciating asset after 33? 40? yrs of aggressive mutual fund investing. I had doubts then, didn't think the facts proving them would come out so soon.

I've always felt that being open minded, honest and modest was the best policy. Every day reinforces that belief.

[Blue Skye]

The title says, "I am being told that Liveaboard Boats loans are now impossible". Then, 50 experts tell him that it's not possible and why. Ummm, pretty sure he got that part before he posted But, there are people out there doing it, how?

I'm interested in hearing from those people that are actually cruising and living aboard with a loan/mortgage, as I'm pretty sure that is what Tacoma was asking originally Thanks Dulce for sharing your first hand knowledge

Good question Tacoma, hoping for good answers, or maybe you'll just get more financial advice

[Hudson Force]

I'll continue with the trend of not answering the original question by telling of our parallel frustration when we attempted to finance the purchase of our first live aboard boat in 1971. At that time my wife and I had the same income and the same professional positions, but the lending intitutions would only consider my income and not my wife's when evaluating our loan request. This was explained to us by pointing out that my wife could become pregnant and then, as a result, lose her income. At the same time we were informed that if we were not married, but in a partnership, we could receive the loan because then pregnancy and the loss of a potential income would not be a risk. This exemplifies the logic of loan officers in the past and in the present.