I am being told that Liveaboard Boats loans are now impossible

[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.

Has anyone in the last two years been able to acquire a marine mortgage on a boat
- that they live on full time with no shore side residence
- cruise on full time outside the US


We have a near maximum possible credit score, and a very long history of very large mortgages and payoffs.

All the lenders said they would lend us far more than we were asking IF we had a permanent shore side residence that we could document:
- utility accounts in our name
- mortgage or rental payments in our name
- lease or sales contract in our name
- property tax bills in our name

and at least a 6-month history of the items listed above.

[MarkJ]

Perhaps you need to be a bit more judicious with your application.

Of course you still live in an apartment.
Of course you would never leave your job,
Of course you would never go cruising
Of course you would never live aboard.

Get the money.

Do what you want

[ianjoub]

Originally Posted by MarkJ

Perhaps you need to be a bit more judicious with your application.

Of course you still live in an apartment.
Of course you would never leave your job,
Of course you would never go cruising
Of course you would never live aboard.

Get the money.

Do what you want

+1

[weavis]

Originally Posted by TacomaSailor

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.

Im lost here.

Why not pay cash for your vessel?

Or go rent an apartment for the address and legal requirements.

Dont fight the rules...........

[DumnMad]

Hi Tac. It makes sense to me that they wouldn't. Over the lifetime of a mortgage the land-based property would likely double in dollar value but the boat value halved. The risk to the bank keeps increasing instead of decreasing.

Could you get a high value land based property borrow to the hilt on that and use the borrowings to purchase the boat?

[Tx J]

Given your excellent history, hefty resources, and the lender's universal requirements (fair or not), it looks like you should consider acquiring an inexpensive shoreside place of lodging (but still semi-desirable, not a shell in a ghetto) just to placate them.

If you're careful you will eventually at least break even on it, meanwhile the extra expense is just the unavoidable "cost of doing business".

Assuming you are on the West Coast where real estate tends to be a little high, it's still probably better to find something there. Here on the Texas Gulf Coast finding a 'something' that would meet the minimum requirements wouldn't break the bank, out there there still should be something somewhere.
Finding something like a unit in a retirement community, an inexpensive stick home, or even a mobile/park model trailer type might be an expedient way of getting over the bump in the road.
In the Coastal Bend area, places like that can be found (last time I looked a while ago) for as low as $20K and up, with a relatively decent place ~$40K+. By decent I mean in a safe area with minimal 'curb appeal/eye candy factor', IOW, low-end livable (demographically, like most people live in anyway); which you're not really going to be doing-- living in it...
I've heard of some very tiny affordable apartment/condo type developments (like 2-300 sq ft/unit) being built somewhere too, that's all you need.

You could rent something like the above types too (then maybe sublet?), but renting long term has a whole different set of problems (landlord liaison, squatters, ?, etc...). You'd probably need a "rental manager" (sort of the obverse of what some landlords use to manage properties). Having kinfolk or somebody trustworthy nearby would be a big plus.

[scuba0_1]

This is good to know thanks.

Sent from my SCH-I535 using Cruisers Sailing Forum mobile app

[Tx J]

Originally Posted by MarkJ

Perhaps you need to be a bit more judicious with your application.

Of course you still live in an apartment.
Of course you would never leave your job,
Of course you would never go cruising
Of course you would never live aboard.

Get the money.

Do what you want

You're just joking I know.
Last time I looked a mortgage app (and any modern loan doc) has all kinds of oaths and affirmations that you must swear to your own veracity.
You lie or deceive, and they will flay you alive, and revoke the loan/seize the assets. (meanwhile WS and the rest can get away with whatever frauds and deceptions they can be "TBTF" to hold to account with).

[gonesail]

if you don't live in a house and have an income measured with W2 statements then you pretty much don't exist to the loan officers. even worse if you pay off your credit cards each month. one solution of course is to pay cash for the boat

[Arthur Garfield]

MarkJ-I agree entirely.

[TacomaSailor]

Originally Posted by weavis

Im lost here.

Why not pay cash for your vessel?

Or go rent an apartment for the address and legal requirements.

Dont fight the rules...........

That is the advice I am getting from all the brokers - I just did not know any of this prior to trying to buy a new boat in the new lending environment.

We have never financed a boat while being full time live aboards and this all caught me by surprise.

Those of you who are suggesting we pay cash - do you have any idea what the tax brackets are above $150,00?

28% from $148,851 to $226,850 ($21,840 tax)
33% from $226,851 to $405,100 ($58,823 tax)

We only pay a 15% rate now and I sure do not want to pay MORE than DOUBLE our current tax rate (33% compared to 15%) just so we can own a bigger boat. Our current boat is perfectly acceptable if buying the new boat means we pay an additional $65,000 or so tax.

I think I got the answer here I needed - we must develop a shore side residential presence in order to qualify for a loan. WHO KNEW?

I guess a perfect credit history, long cruising history with a local boat mortgage, and bullet proof fixed retirement income is still not sufficient to make a lender happy.

[sailorboy1]

Originally Posted by Tx J

You're just joking I know.
Last time I looked a mortgage app (and any modern loan doc) has all kinds of oaths and affirmations that you must swear to your own veracity.
You lie or deceive, and they will flay you alive, and revoke the loan/seize the assets. (meanwhile WS and the rest can get away with whatever frauds and deceptions they can be "TBTF" to hold to account with).

the last thing the lender wants is a boat

[maj75]

Originally Posted by MarkJ

Perhaps you need to be a bit more judicious with your application.

Of course you still live in an apartment.
Of course you would never leave your job,
Of course you would never go cruising
Of course you would never live aboard.

Get the money.

Do what you want

Not even remotely funny.
Do this and you can go to jail. It's called mortgage fraud and people are going to jail for crap like this.

[Capt Phil]

We have a close friend who was a former neighbor who lived aboard in the same marina with us on his HC 43. He talked with a banker when he was trying to get a loan to purchase either another live aboard or a shoreside condo. For collateral he has well in excess of the purchase price in raw gold held in a safety deposit box in the bank. He was turned down for both mortgages because he does not have sufficient W2 verifiable income although he is a CPA, even though he offered to have the bank hold his gold physically.
While mortgage lenders can afford to be picky to whom they lend funds, the government has made acquiring a mortgage virtually impossible by their promulgation of laws and other banking restrictions unless you meet a vary narrow set of guidelines and fall within their interpretation of credit worthiness.
This entire scam is going to come to a shuddering halt at some point and those who hold gold or tradeable hard assets like food, ammo and firearms will be the only ones able to sustain life. Tragic but true and it will hit world wide, unfortunately.
Those who are fortunate enough to be self sufficient cruisers or living aboard will be in a far better position to come out the other end with a whole skin than those living shoreside, particularly in an urban area! I feel fortunate that I am not going to be around to see it. Phil

[ianjoub]

Originally Posted by maj75

Not even remotely funny.
Do this and you can go to jail. It's called mortgage fraud and people are going to jail for crap like this.

If it is all true when one signs the mortgage, then there is no fraud. One may then divest himself of all that crap after the fact.