Posted by GA/Atty on 8/27/08 6:37pm
Msg #262087

1003 and Statement of Intent to Apply for Joint Credit

OK - I know this issue has been discussed before: should a solo borrower sign it or not........

I know different title companies and different lenders will tell you different things, but my question is different and I didn't see it answered in prior posts.

When a borrower signs a loan document - any loan document - he is generally doing one of three things: (1) making a promise (such as a promise to repay the loan or a promise to pay the taxes and insurance on time); (2) stating that certain information is true (signature affidavit, property owner's affidavit); or (3) acknowledging that he has been given certain information (affiliated business disclosure, TIL).

What exactly is he saying or promising or acknowledging by signing the statement of intent to apply for join credit?

Of course the correct answer is that he is telling the lender that he understands that the terms upon which they will offer credit may be impacted (at least in part) by the credit-worthiness of an individual other than himself (ie a co-borrower).

So my question is - when someone says that a solo borrower should sign the statement of intent to apply for join credit, has anyone ever heard a credible reason for it? IE what does that particular signature mean?

Reply by dickb/wi on 8/27/08 6:50pm
Msg #262090

many states are spousal states and require that you.......

stae whether this is a loan on your own or joint credit........in wisconsin they go a step further and state "this loan is in the interest of the marriage and family".......if a person in this state has a loan only in the borrowers name [and not the spouse] the spouse is still liable for 50% of the loan.....if you take out a loan in your name only the state requires that the lender notify your spouse of that fact.......if the lender doesn't notify the spouse there could be serious consequences for the lender......we are more than a spousal state...we are a marital property state which is markedly different than a community property state or the normal spousal state.....hope this helps some......

Reply by PAW on 8/27/08 7:02pm
Msg #262092

The commonly accepted definition of "joint credit" (as it applies to financial transactions and investment banking) is: "Credit issued to two or more people based on their combined incomes, assets and credit histories. The parties involved accept joint responsibility for repaying the debt." Typically it is based on the IRS rules where financial information is reported to two different financial accounts (social security numbers). Thus when credit reports are pulled and analyzed, one SSN account information would jointly be included on another SSN account. Therefore, joint credit is often applied to married couples, since married couples are able to file their taxes and financial information jointly.

Investopedia says... Many married couples apply for joint credit. This is especially true with the purchase of a home. Joint credit is an issue and concern in divorce proceedings, under which the terms may give one partner responsibility for certain debts and the other partner responsibility for other debts. It is possible that subsequent to the divorce proceedings, the former partners may still affect one another's credit.

Reply by RickinVA on 8/27/08 7:06pm
Msg #262093

I am going to recite MY interprtation of that statement, which has drawn fire from some of the most respected of the posters here. I read it as sign here! IF it is an application for joint credit, then both need to sign here. It just needs a comma or a period to clarify but since it has neither, it is open to interpretation. However, with that said, I bow to the wants of the hiring entity if there is only one borrower. BTW, I have NEVER had a complaint about how it was signed.

Rick

Reply by GA/Atty on 8/27/08 7:12pm
Msg #262095

**IF it is an application for joint credit, then both need to sign here.**

Ok I understand you say they both need to sign there. But what exactly is the significance of that signature?

IE the signature on the note is a promise to repay the loan; the signature on the DoT is a conveyance of an interest in the property; but what does the joint credit signature do - what purpose does it serve - when there is only one borrower?

Reply by NCLisa on 8/27/08 8:25pm
Msg #262114

It serves no purpose if there is only one borrower, a single borrower can not apply for joint credit!

What bothers me, is when the lender requires both borrower and non-borrowering spouse to sign, as the intention was for only one of them to apply for credit!

Reply by MikeC/NY on 8/27/08 8:31pm
Msg #262117

I don't think it serves any purpose other than to satisfy the needs of some anal-retentive in the lender's accounting department...

If only one party is required to sign the note - even if both have to sign the mortgage or DOT by state law- how can it be joint credit?

Reply by Lee/AR on 8/27/08 8:28pm
Msg #262116

If you are looking for a 'good' reason, you're in the wrong

place. I've seen 'em every which way, sometimes with 2 inch tall 'instructions'. When it's edocs, I do it both ways...they can pick. Maybe some day they'll all agree on who should sign this when, but I'm not holding my breath.

Reply by JanetLA on 8/27/08 8:59pm
Msg #262124

The reason I have heard is that some notaries cannot

figure out when to have them sign and it is easier to tell them to sign there regardless of single or joint borrowers. In our state we are told that the reason both of the co-borrowers have to sign is to recognize that they have in fact applied for joint credit and the co-borrower might have a lower credit score. The co-borrowers have the right to apply for separate credit even if they are married to each other. This is supposed to stop them from coming back later and saying that they didn't know that co-borrower caused them to have a higher interest rate. There is supposedly another reason in history that women used to have to apply for credit with their husbands, and were required to do so every time. I have no proof of this, but it is rumor in Louisiana...

Reply by Joan Bergstrom on 8/28/08 1:16am
Msg #262150

I do exactly what Lee does

This 1003 credit signature has been a mess since it started.

I got sick and tired of being "CORRECT" and then having whoever hired me call me and tell me the "single borrower" should have signed the top of the 1003 and I have made a mistake!

My suggestion: You want to be hired again, have the single borrower sign the top of the 1003.

Reply by SReis on 8/27/08 10:22pm
Msg #262135

I NEVER have single borrowers sign it UNLESS specifically requested by title/lender. I had one today that there was a sep sheet included that stated: It is my intention to apply for joint credit. The borrower refused to sign it. Can't blame her either. As for the reason they want it signed. I would have to agree w/another poster, just to cover all of the bases BUT I do NOT think that they could actually force the borrower to do so since the statement they are agreeing to is inaccurate.

Reply by Charles_Ca on 8/28/08 12:00am
Msg #262143

GA/Atty, I really love the way that attys think.

The average person carries a lot of baggage when it comes towords and concepts, but attorneys have no such restraints. Rhetoric and argumentation are a sport. Think like an attorney and succeed!

Reply by Rick_NY on 8/28/08 9:54am
Msg #262199

I NEVER have an individual applicant sign that section.

The one or two times a clerk has called me post-closing to inquire about the lack of a signature, I ask them to look at the 1003 loan application and identify for me just who the joint applicant is. I can then almost see the light bulb pop over their head and they say, "Thank you! Bye!"

Back in July, 2005, when this mess started, I spoke to a loan underwriter friend of mine who informed me that not only does it NOT HELP to have an individual credit applicant sign in that spot, it may hurt the file. In the future, when an potential investor or auditor may QC a file and see that signature, s/he may very well ask, "OK, who is the joint applicant, where's that co-borrower info? Is this file incomplete?"

NOT good.

Reply by WDMD on 8/28/08 10:18am
Msg #262210

Personally, to save any future aggravation I have single borrowers sign it. If the lender doesn't want the signature all they have to do is trash the signed one and print a un-signed one for their files.

Reply by Rick_NY on 8/28/08 10:29am
Msg #262215

That MIGHT be a good idea, but --

-- what happens when the incorrectly-signed-at-the-top page one is part of a variation of the Form 1003 (and many are) that require the borrower to initial at the BOTTOM of page one and two?

Ummm ....

Reply by WDMD on 8/28/08 10:36am
Msg #262218

Re: That MIGHT be a good idea, but --

I guess they could handle it with either the correction agreement or mail it back to get the initials. I suppose they could white out the signature also. We could play what if all day long.

Reply by WDMD on 8/28/08 10:36am
Msg #262219

Re: That MIGHT be a good idea, but --

I guess they could handle it with either the correction agreement or mail it back to get the initials. I suppose they could white out the signature also. We could play what if all day long.

Reply by WDMD on 8/28/08 10:38am
Msg #262220

OOOPS didn't mean to post twice n/m

Reply by Rick_NY on 8/28/08 10:47am
Msg #262224

Whiting out a signature on a loan app? Really?? n/m

Reply by WDMD on 8/28/08 10:50am
Msg #262226

You don't think anything like that has been done before? n/m

Reply by BrendaTx on 8/28/08 11:35am
Msg #262246

Rick - wdmd is correct. Things like this are common.

Not necessarily for a means for ill-gotten gains but for getting things done w/o having to send it back out to the field.

Right? Nope.

Realistic? Totally.

Reply by Rick_NY on 8/28/08 12:04pm
Msg #262253

Brenda, I'm not sure what you're suggesting.

I'm not naive. I know that things are frequently done to expedite a case. When I replied, "Really?" it had more to do with the risk of a lender's or title agency's employee getting caught at it.

What WDMD describes does not solve the problem. A signature, a date, or initials that are whited-out on a form will be easily detected by an auditor. If a document is subjected to a white-out and then photo-copied, thereby removing the evidence of the white-out, that does not solve the problem I described in my post, that is, initials MISSING from the bottom of the first page of a 1003 because of the removal of the incorrectly signed page one (permitted by the NSA) and its subsequent substitution with a fresh page.

Whiting out doesn't solve the problem. Yes, the Correction Agreement or Limited Power of Attorney used in many files fixes that problem, and legally. But what really solves the problem is doing a job right the first time. I know you're not averse to that. I don't know why some other agents are.

Reply by WDMD on 8/28/08 12:30pm
Msg #262265

Re: Brenda, I'm not sure what you're suggesting.

"But what really solves the problem is doing a job right the first time. I know you're not averse to that. I don't know why some other agents are."

Which is your opinion. If it was set in stone to do it your way everyone would. I know in my experience with the companies I work with I have not had a problem doing it the way I do it. These are not companies I work with once in awhile. I do several signings monthly with the same companies and have been told to do it this way. I'm not going to change because there is a difference of opinion on a notary board.

Reply by Rick_NY on 8/28/08 3:27pm
Msg #262324

WDMD: OK, go ahead and do the job incorrectly just because--

-- the people who hire you tell you to do so. If they told you to backdate a notarization, would you do that? They write your paycheck, maybe you should. (I hope not.) By the way, I'm not telling you or anyone how to run their business. Continue to as you have been, if it pleases you. I'm just stating facts. This should no longer be a question to anyone in the business.

Here's what the NNA reported almost 2 1/2 years ago regarding how agents and title companies are handling the "joint credit" issue:

"Signing Agents Report Confusion Regarding Form 1003" -- March 14, 2006

http://www.nationalnotary.org/news/index.cfm?Text=newsNotary&newsID=880

But wait a minute: You know, I see drivers frequently running red lights as I make my way around the region. I seem to remember from driver ed. (36 years ago!) that it was a no-no. Some days it seems like EVERYONE is doing it. I haven't looked at the traffic code very closely lately, so I could be wrong. Maybe since EVERYONE is doing it, it's now the right thing to do. And even if it's not, the chances that I’ll get caught are very small, right? And EVERYONE else was doing it ... Your Honor.

Maybe I don't personally, and the NNA as an organization, doesn't have a lot of credibility on this Board, but this other guy seems to ... or maybe he's all wet, too. Actually, I'd throw in with him any day. Here are a couple of posts found through "SEARCH."

================
Reply by PAW on 1/11/07 1:16pm
Msg #170341

Re: Me, too Barbara [Replying to a comment that it's "better to have it signed and not need it than to need it signed and not have it"]

Except when the underwriter reviews the 1003 and wants to know where the other borrower is that is applying for joint credit.

I have been instructed by lenders and title companies that only those applying for joint credit are to sign the top of the 1003. Unfortunately, many brokers and loan officers don't understand why the one line and signatures were added to the 1003. (The paragraph preceding the last line has been there for years!)

I do not have single (as in number of) signers sign the top of the 1003, even for CountryWide loans. FannieMae and FreddieMac compliance departments both agree that only if there is an application for joint credit, should the applicants sign the top of the 1003.

The updated Uniform Residential Loan Application (Fannie Mae Form 1003, FreddieMac Form 65) has a section at the top of the form that enables the borrower and co-borrower to indicate their intention to apply for joint credit. This added section renders the use of "Evidence of Joint Application" (EOJA.MSC) form unnecessary or obsolete in those cases where the 1003 application form is used. However, because the 1003 application may not be used as the application for some types of loans (for home equity lines of credit, for example), the form may or may not be removed from loan packages. Many lenders do not, and never have, included the EOJA form which led FannieMae and FreddieMac to add the statement and signature to the 1003.

=======================

And later on in the same thread:

Reply by PAW on 1/11/07 1:45pm
Msg #170358

Re: [This is why] not to have an individual sign the 1003 [in the joint credit section]

I had an individual applicant sign the 1003 as per instructions from the loan officer. (And against my judgment.) Four days later, I get a call from the servicing lender who is buying the mortgage from the correspondent lender wondering where the other borrower is and why their information wasn't made available. Needless to say, there wasn't another borrower and the application was for INDIVIDUAL credit, not joint credit. After having my butt chewed out, I told him that I was instructed by the loan officer to have the sole applicant sign. I haven't done that again since. I have had brokers and LO's tell me that a sole borrower must sign, but I explain why I don't. If a lender wants the borrower to sign, they can contact the borrower directly. They don't need me to do something that is against my better judgment."

====================

There are plenty of forms that we are sometimes asked to have the borrower sign that they really do not need to sign, and there is "no harm, no foul" in doing so. This is NOT one of them.

BUT EVERYBODY, PLEASE: Do what you want to do; it’s your business.

Reply by WDMD on 8/28/08 3:42pm
Msg #262328

Re: WDMD: OK, go ahead and do the job incorrectly just because--

Rick, I appreciate the link to the NNA article quoting a SS owner and a signing agent. I also appreciate the posts of other notaries opinions on the subject. Could you please provide a link to a regulatory bodies opinion on the subject so I could forward that to the lenders and title companies I work for. I don't think they will change their way of doing business because some signing agents say it is wrong.

As for doing it the way it is requested of me, I certainly will, as they are not requesting an illegal act as you seem to imply they are by comparing it to backdating. It is no different a request then if they asked for the DOT to be witnessed when it is not a requirement for that particular state.

I look forward to a link from a regulatory body showing that it is against whatever regulation so I can forward it on to the people who really count. The lenders and TC's.

Reply by Rick_NY on 8/28/08 4:18pm
Msg #262338

Link to U/W Guidelines

I haven't spoke to my u/w acquaintance in a loooong time. If I can find something, I will. As for the legalities, PAW has addressed that issue:

Besides the agent possibly getting chewed out by underwriters and seller-servicers, we're basically asking someone to represent that another party is also undertaking the debt obligation when there is no such person.

As it states on page 3 of most 1003 App's "(1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation that I have made on this application, and/or in criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Sec. 1001, et seq. ...."

So if an investor buys the loan believing there is a co-borrower, and there is no co-borrower, well, it might be kind of a big deal.

While the agent may not be him/herself doing something illegal (such as backdating), they're asking someone to do something illegal. Will it ever really become a problem for a borrower? Probably not. But knowing what you know now, if you were a borrower, would you "just sign there so we can be done with this already?"

Reply by WDMD on 8/28/08 4:27pm
Msg #262342

Re: Link to U/W Guidelines

Thanks Rick. I hope you can find something. I don't want to antagonize my clients over something they want done on their documents. In this climate, it's best to keep your clients happy within reason. I've never had a borrower refuse to sign it, but if they did, I do not press the issue. I have a policy that if a borrower does not want to sign anything in the package it is their right and not up to me to force the issue. They just sign a note stating their refusal.

As far as investors buying the note, frankly it's not my concern. If the original lender wants a single borrower to sign the top of the 1003, then it's their problem if a investor balks. I just do what is requested of me, as long as it's not an illegal act.

Reply by BrendaTx on 8/28/08 2:28pm
Msg #262314

I am just saying who knows what

tweaks happen after they leave our hands.

I'm not saying you're naive!

Reply by Rick_NY on 8/28/08 2:46pm
Msg #262320

Re: I am just saying who knows what

"tweaks happen after they leave our hands."

Agreed.