Posted by Linda Juenger on 12/17/13 2:42pm
Msg #496388

Question.

Had a signing last night that did not close. Borrower refused to sign the DOT because it had their residence listed as a Second Home along with a 2nd home rider. This property is NOT their 2nd home, it is their primary residence and the ONLY piece of property they own. There was also no RTC in pkg. Title said to adjourn after we could not reach lender.

This is rescheduled for today and nothing has changed. Borrower told me that they have to do it that way because he works and lives (in a rented efficiency appt part of the time in AR. I am not understanding this. Lot's of people work in a different state and refi their primary home in another state. This makes no sense to me. Just trying to understand this logic. Borrower isn't too happy, but said they will go along with it.

Reply by Larry/IL on 12/17/13 2:49pm
Msg #496389

Not giving any legal here but I would think his apartment in AR has nothing to do with it unless his ID or Income Tax Return reflect this AR rental as his residence.

Reply by Linda Juenger on 12/17/13 3:02pm
Msg #496392

His ID is an IL D/L. I have no idea what his tax return says.

Reply by Larry/IL on 12/17/13 3:05pm
Msg #496393

I'd be curious to hear the explanation for that one since many loans for second properties have higher interest rates different stipulations and no RTC.

Reply by Linda Juenger on 12/17/13 3:18pm
Msg #496396

I'll try and get more info out of borrowers tonight, as it is rescheduled.

Reply by Doris_CO on 12/17/13 4:23pm
Msg #496404

If the borrowers are willing to sign the loan as it is, that's their decision. We can't help them make a decision. Right now, it doesn't look like this is the right loan for them, but we are all third and fourth parties to this without all the information regarding this loan and, really, this is none of our business.

Reply by Notarysigner on 12/17/13 3:33pm
Msg #496398

Re: Question. I was thinking the same about

the interest rate. If he got it the rate of a primary resident that would be one thing.

I lived in Seattle for two years (working there) but never changed my resident. I didn't have a problem when I refi'

Reply by Ilene C. Seidel on 12/17/13 3:50pm
Msg #496400

Seems to me he gave too much information. My accountant says only answer the questions don't add info.

Reply by Rita Adu on 12/17/13 4:14pm
Msg #496402

I'm wondering if he reported receiving some type of rental income from the property when he's not there?

Reply by Marian_in_CA on 12/17/13 4:17pm
Msg #496403

I dunno, something seems off there. My first guess is that the one of the spouses owns property somewhere else, or is trying to keep is separate? Do you live in a state where spouses can do that?

The reason I say that is because I actually had one fall apart on me once... very similar situation, though I didn't really get the whole story. It was the wife who had purchased a home elsewhere, separate from her husband. She handled all the finances and her husband was never aware. She'd been using that other home as her "primary" residence for a variety of issues... and apparently, when she bought the house she told the bank she was getting a divorce and that she and her husband were separated. Well, it turns out they weren't, or never did. Several years later, she still has (and uses) this other home when on the road for business. Her husband thought it was a corporate rental that her company owned. They decided to refi their home, and on the refi they turned it into an investment/2nd home because the wife already owned the other property. The wife as trying to hide all of that at the signing, but the husband caught it and it got a little ugly. I took off! I got a call the next day and was told that the loan was cancelled.

Reply by John Tennant on 12/17/13 4:31pm
Msg #496405

Income tax has no bearing on this situation. If a person is employed, full time or part time, over 100 miles away from their permanent residence they can rent an apartment to avoid the commute. For tax purposes this apartment becomes the "tax" home. IRS purpose is to avoid allowing the apartment costs and related expenses from becoming tax deductions. His permanent residence is still where he goes back to. However, if the permanent residence is rented or leased out then it becomes income property, and the apartment becomes the permanent residence. Reference IRS Publication 17.

Reply by HSH/WA on 12/17/13 4:39pm
Msg #496407

Re: If the BO is OK with it - end of discussion

as far as the notary is concerned. The question is: extra driving/closing fee?

Reply by Linda Juenger on 12/17/13 6:09pm
Msg #496422

Well, would have never guessed this one.

I asked the borrower to explain this to me if he felt comfortable in doing so. The answer is:

Wait for it: LOL

The home had been for sale and did not sell. In order to refi, the home had to off the market 6 months and it was not. So, the lender still considers it for sale although the contract ran out with the realtor as anyone who looked at the home (say a open house type thing where people sign in) can still buy the home during the 6 months. Make sense? No, but that's the answer I got.

They still want to sell but are waiting till spring to put it up again.

Reply by Linda Juenger on 12/17/13 6:13pm
Msg #496424

And, to everyone who said its "not our business" is right

in some ways, but not in others. The borrowers last night refused to sign when I was going over the Mortgage and showed them the riders. The Second Home rider through a wrench in it. They were not told this by their LO. Title also thought it was incorrect and if we could not reach lender, to adjourn since there was no RTC.

Once again, a LO not doing their job explaining. Go figure.

Yes, its none of our business, but when the borrower's don't know why, then it becomes our business to help them find the answer by calling the appropriate party.

Reply by ReneeK_MI on 12/18/13 6:12am
Msg #496456

now it makes perfect sense

Qualifying it as a 2nd Home allowed the lender to extend the rate the same as a Primary Res - rather than an Investment prop. Since the borrower explained (and the Lender would've known, as any recent listing is disclosed on the appraisal) that the house was for sale - this makes doing it as Primary Res a bit more complicated (depending on Lender). Borrower says he intends to re-list, and he quite likely disclosed THAT to the lender as well. Additionally, the house might be void of such things as furniture (appraisal shows interior photos), might not be used as his mailing address (another tip-off), etc.

Reply by C. Rivera Chicago Notary Services on 12/18/13 8:07am
Msg #496466

Re: now it makes perfect sense....it does but

why is the lender still insisting that the home be qualified as 2nd home? They do not own any other property? Its still their primary home.

What am I not getting? It seems to me that the borrower should back off, and consult an attorney on this to renegotiate the rate, if this is the issue, as it may seem to be, at the primary res rate, but qualify the house their primary.

Reply by ReneeK_MI on 12/18/13 11:15am
Msg #496487

Carie - further explanation

"Primary" home doesn't need to be a house that you own. A primary home can be an apartment where you live, the address you use for mail, etc. "2nd home" doesn't mean you own two houses - it means it is not your primary residence.

For example - if you rent an apartment in Chicago and buy a home in FL where you go for 3 mos in the winter, you only own one house but it is still a 2nd home and not your Primary residence. If you get a loan on that FL house, you get a "2nd/vacation" home loan - not a "primary residence" loan - although the rates between those two designation wouldn't necessarily be different from each other.

Reply by Luckydog on 12/17/13 6:17pm
Msg #496428

Just on the surface, by what you said, I wouldn't sign it either, BUT, as we all know in this business what they tell us and the truth are sometimes different things. I have been getting a lot of buyers claiming to be single to everyone involved, and then at the closing they tell me they are married, and BIG shock to everyone. They think it doesn't count because the spouse is in another state/country; separated, or they were married in another country. Now it has to be disclosed, or becomes mortgage fraud. Anyway, it would not surprise me if another property did show up, or perhaps they were Quit claimed deeded on to a property maybe by their elderly parents home or something. Who knows, but something def. off there. Anyway, you brought it to their attention, and you should get the 1/2 price trip print fee, and then get your reg. fee upon returning regardless if they changed the papers or not.

Reply by MW/VA on 12/17/13 8:29pm
Msg #496440

I see military personnel all the time that have their

Primary residence in another state, and it's still considered their Primary. I do realize that military get special consideration.,
I don't know how IL laws read, however. I agree that it would be about the interest rate. Either way, he'll get a tax deduction.

Reply by C. Rivera Chicago Notary Services on 12/18/13 8:01am
Msg #496464

If they both live out of state (90+) days, and at least

six months out of the year, aren't they considered residents of that out of state rental?

But that's not the point I wanted to make. I believe the lender has their situation all wrong, in that if they do not own ANY OTHER PROPERTY, anywhere, why in the hell are they agreeing to sign the documents the way its stands as their only property being their 2nd home? Doesn't make sense? Now if they owned a home where they are working, out of state, and have been there up to six months out of the year, then yeah, I would agree that their primary home in this state is now there 2nd.

I would've advised them to consult with an attorney FIRST before signing, clearly something is very fishy there!