Posted by docs1954CA on 8/21/09 9:58am
Msg #301182

Vesting question, for those in the know....

I had a closing last week that had a GD in the package that changed the vesting from husband and wife, to wife and husband.Not a big deal IMO, still equal ownership in the property, but this alone caused the borrowers to refuse to continue with the closing.Since the signing took place on a Saturday, no one from TC was available to advise the borrowers on why this was necessary, and of course I didn't offer any advice on why this was included. Both borrowers had almost equal income, and credit scores...I can't think of a logical reason why this was necessary.

Reply by Linda_H/FL on 8/21/09 10:10am
Msg #301184

Who was borrower and who was co-borrower? Maybe someone at lender determined this to be an issue and decided vesting had to match application.

Not sure why this would be such an issue for the borrowers as long as they both continued to hold title....sounds like A-personalities at work here..

MHO

Reply by docs1954CA on 8/21/09 10:33am
Msg #301187

As I recall, husband was primary borrower, which was what triggered my thoughts of " this makes no sense".Leaving that doc out and signing everything else was another thought I had, but I didn't want to waste any time signing everything else and then having the package bounce.The husband was pretty upset about it, and proceeding was out of the question.Thanks for your thoughts.

Reply by GA/Atty on 8/21/09 10:21am
Msg #301186

If that was really the only difference, then it was simply a

case of the title company not knowing what they were doing. Stuff like this happens all the time. If TC had been available, they probably would have given some nonsense reason for it.

I would have had borrowers sign everything else and return the package with the gift deed uinsigned.

Reply by dickb/wi on 8/21/09 6:37pm
Msg #301257

ditto ga.......i just had that happen but borrowers...

really didn't care who was listed first so they signed.......it was just a usless venture that really served no purpose under wi marital property laws...............

Reply by ReneeK_MI on 8/21/09 11:54am
Msg #301197

Can often find the answer ...

spelled out in the Closing Conditions w/in the Instructions. Whether it would make sense or not, that's another question ... but weird things like this, when you can't reach someone - check the closing conditions. It at least gives you an easy 'out', something you can point to and say "well, because your lender made it a condition, you can read it right here ..."

Reply by jnew on 8/21/09 12:09pm
Msg #301199

Re: Can often find the answer ...

I am fairly sure that it does not matter. There is equivalency in the vesting language. I used to work with a loan processor who used to put the wife first on the mortgage even though the vesting on the deed is husband and wife. Back in the stone age (1960's) it was John Jones and Jane Jones, his wife which denotes a possessive and was changed to suit the objections of women and rightly so. I think the better practice would be to show the same vesting that appears on the deed, unless it is wrong.

Reply by Charles_Ca on 8/21/09 12:25pm
Msg #301202

Vesting is such an important issue that no one other

than those taking vesting should make that decision: the implications can be immense and so the liability. Refer them either to their attroney or tax practitioner. Don't get involved.

Reply by LKT/CA on 8/21/09 12:53pm
Msg #301203

Either the signers are very nitpicky or this could be cultural - even if the wife is working and on the loan and title....STILL, the man has to be named first **in their family**. I've done signings such that when I walked in the door, I just "knew" who was in charge of that household and upon signing, I made sure the each paper was passed to the husband first for his review and signature.

Most signings, the couple doesn't care who signs first or who reads what first. In some households, it matters. Just a thought......

Reply by Pat/IL on 8/21/09 1:46pm
Msg #301204

Just for the sake of discussion

Since I am in Illinois, and we don't even use a GD (Grant Deed, right?) here, I have been under the impression that a Grant Deed has Pretty much the effect of a Warranty Deed does here. If that's the case, there's only one reason I can think of that the GD would have been included, and that is the tenancy in which the property is held.

Most states, I believe, recognize a tenancy in common, which could pose a problem to the lender. It does not confer survivorship rights to the surviving tenant should the other become deceased. Thus, upon the death of one of the borrowers, title would pass to his heirs according to the laws of the state. It could result in ownership by people who are not parties to the security instrument (DOT).

Filing a deed changing the tenancy to joint tenancy, or to tenancy by the entirety, both of which do confer survivorship rights, would cure that potential problem.

Again, this is just for the sake of discussion - because I am a title nerd. Rene's suggestion that you look to the closing instructions for possible answers, is a good one. Also, I agree with Charles in that nobody should be dictating to a home owner how they are to hold title. I would go even a step further to say that people should consult with a lawyer before any deed of conveyance is prepared.

Reply by ReneeK_MI on 8/21/09 1:55pm
Msg #301207

Just for the sake of further discussion =)

Good possibility, Pat - also I thought possibly one of the borrowers was never actually wholey vested, and only had implied interest via dower or homestead? My imagination only stretches so far!

Being that we're talking about an actual transfer deed, I heartily agree that this is an area for legal counsel.

Kudo's to borrowers like this who realize the potential impact of a 'deed gone wild'. =)

Reply by Susan Fischer on 8/21/09 10:58pm
Msg #301307

A point about Joint vs. Tenants by the Entirety:

The right of surivorship is not the only issue.

Joint tenancy = each own 50% of the property. Each has the full bag of ownership sticks. Possession. Right to encumber. Assumption of Risk, etc. Creditors are more favored in that they can force a sale.

In Tenants by the Entirety, each own 100%. Neither can encumber the property without the concent of the other. Both interests becomes incumbered, in that event. Creditors are more limited in recovery.

Many more legal considerations apply, of course, but the two vestings are different, and the ownership interests are greatly affected by their applications.

Not a lawyer, yada yada.

Reply by Pat/IL on 8/22/09 1:16am
Msg #301322

Re: A point about Joint vs. Tenants by the Entirety:

Susan, this is going to seem like nitpicking, and maybe not worth arguing, but I really am a title nerd, so I am going to argue it.

The percentage ownership in a joint tenancy is always equal as to the joint tenants because they hold all of their interest jointly, with equal rights to the property. However, you are off base with the 50% ownership thing. You could have five joint tenants, each with an equal right to the property, but it is a jointly held interest, not split. You might also have one tenant in common holding 60% and three joint tenants holding 40% jointly. There are many possibilities.

Tenants By The Entirety do not each hold 100% interest. If that were the case, a married couple would own 200% of the property. I can't speak for California, but in Illinois, you could find a maried couple in title to their homestead property as to 50% interest as Tenants By The Entirety and Grandma in title as to 50% as a Tenant In Common.

In any case, Tenancy In Common may be broken into unequal shares of ownership, while the other tenancies are held as equal rights to the same percentage - whether it be 100% or less.

Reply by dickb/wi on 8/21/09 6:43pm
Msg #301258

very well said pat............ n/m

Reply by Doris_CO on 8/22/09 11:19am
Msg #301352

This might simply be the title company trying to match the vesting to the way the original application was taken. How do the names on the loan docs read? If the names are wife and then husband, the wife probably was the one who made the initial call and the LO entered her name 1st on app.