Posted by pat/WA on 2/8/13 12:14pm
Msg #454765

test question

What does it mean when there is only one name on the DOT but two names on all the other documents?
I have never had this happen. I have had two names on the DOT and one name on other documents.

Reply by VT_Syrup on 2/8/13 12:18pm
Msg #454767

Could it be that one signer is a co-signer, but does not have any ownership interest in the property? For example, a dad co-signs a loan for an adult child, because the child wouldn't have good enough credit to get a loan otherwise.

Reply by Yoli/CA on 2/8/13 1:16pm
Msg #454790

VT's answer makes sense to me.

Reply by BrendaTx on 2/8/13 1:21pm
Msg #454791

I have never known and don't really care! I would probably say, "Redraw?" lol.

Reply by Notarysigner on 2/8/13 1:49pm
Msg #454795

If both names are on the note as well as all the other documents with the exception being the the DOT, my next question would be, are they Domestic partners where one of them qualifies for the loan and the other is the current owner.
If they are legally married there would have to be an inter-spousal grant deed also. Sometimes the TC has that already. I wouldn't worry about it, the TC sent them to you, just notarize as needed.

Reply by Bear900/CA on 2/8/13 1:24pm
Msg #454792

“What does it mean when there is only one name on the DOT but two names on all the other documents?”

Usually it’s the other way around.

If this is strictly just a test question it means that there are two people responsible for paying back the note but the property is only vested in one person’s name. Everyone here is probably saying that’s a no brainer. But what else is involved?

1) Google and learn the difference between a note and a DOT.
2) Google and learn how property may be vested in a community property state (WA) and why so.
3) Understand that there is a difference in what a customer desires and what an underwriter demands that can change the way a loan is set up.

In the real world, just sign it and be done with it.

Cheers!

Reply by Darlin_AL on 2/8/13 2:28pm
Msg #454806

Easy, community property state. Anyone living at that domicile must sign on the mtg but not the note. Usually Truth in Lending, Right of Recession forms--whoever cranks out the docs puts in whatever forms with that person(s) name already there somewhere. It came about historically, the husband would make a zillion mtgs & wifey wouldn't know about it until the foreclosure happened when he defaulted for whatever reason, or died leaving here penniless with no choice & 7 children.

Reply by Bear900/CA on 2/8/13 2:38pm
Msg #454812

Curiously, I just signed one like this last week

It wasn’t my place to ask how or why. Here’s the background:

Retired couple purchasing income property with 30% down, both on the note but vested just in his name.

Can he purchase and own property by himself in a community property state? Yes, so long as he pays with his sole funds.

Probable underwriting scenario: the bank won’t allow expected rental income to help qualify the loan. The couple’s combined income may consist of pension and SS so they needed both to qualify.
UW may have swayed in his favor if he had more personal funds tucked away but they needed a starting debt-to-income qualifying ratio. The bank still has its hands on the security instrument (the DOT), and can take possession.

Why would he do this? He may have had children from a former marriage that he wants to leave the property to. Perhaps he's widowed and the funds came from that previous marriage so he feels they should inherit the interest.

What if: the wife ends up making some payments using her money or money earned together? Then in court she can claim part interest in the property.

Reply by ReneeK_MI on 2/8/13 3:03pm
Msg #454817

It is curious, and interesting ...

I'm not at all familiar with community property, but when I was in lending we wouldn't allow a borrower to obligate themselves on a debt for which they had no interest or anything to 'gain'. Being ever fearful of lawsuits, it was felt that this smelled just a little bit like predatory lending (i.e. "how could you, Mr. Big Lender, allow ME, just a person, to do this to myself?!") Additionally, it was considered a little bit of a risk to have a non-titled person obligated on the loan - what's the incentive to pay, other than their credit rating?

In certain divorce situations, where the court ordered the primary bread-winner to pay or help pay for the home w/out benefit of interest, we would do it but via a copy of the court order and the non-titled person's affidavit releasing all interest (regardless of not having any) attached & recorded along with the deed/mtg. Plus pinkie-swearing.

Reply by Bear900/CA on 2/8/13 3:14pm
Msg #454823

Re: It is curious, and interesting ...

It's just a possible scenario for a loan I signed without second guessing it.

Afterall, she could have done the same with another piece of property. Nothing wrong with helping each other out. We don't know the details.

It could have been for other very good reasons. Whatever the case I am sure the borrower had to provide UW with a letter of explanation that made good sense. Banks these days are so far removed from predatory lending due to current laws I doubt that was the case. It is a much different lending world.

Reply by ReneeK_MI on 2/8/13 4:08pm
Msg #454843

I should clarify

I didn't mean to say it IS predatory, only that the lenders I worked with wanted to stay yes-that-far away from any HINT of predatory that they rarely would lend to someone who had no title interest. Also, I was in wholesale, and there's the secondary market's influence on what flies/doesn't fly. What a bank might/could do is probably a whole other scenario if they're holding onto the loan.

Reply by Bear900/CA on 2/8/13 6:04pm
Msg #454865

Re: I should clarify

That's a reasonable assertion and accurate too. I only broker with wholesale lenders, not portfolio lenders that hold their own paper. I'm not a correspondent or banker.

You’re right, they are very cautious as they don't want to take back a loan or be unable to sell one. If they have to they are going to push it right back to the broker. Point is, you just don’t see predatory loans anymore unless there is outright corruption. There are too many checks and balances now.

The new and tougher Qualified Mortgage rules just came out from the CFPB. 80% of new origination is already meeting the new standards. This demonstrates that standards have largely put in place and are being abided by.

Wholesale has more overlays for protection then required by the GSE’s. That is normal. So when I see a loan being approved and signed I know all the loops and hoops it had to go through to get there.

I don’t feel uncomfortable at all with these loan scenarios. They are not being shuffled through in some dark corner. I have no doubt that wholesale reps have to meet regional standards to get their deals done. Region, meet region.

Reply by Bear900/CA on 2/8/13 3:05pm
Msg #454818

Interspousal grant deeds are always a red flag to me

Not because it matters in notary activity. But as an LO I have to wonder why.

Typical loan scenario: banks use the credit score of the spouse (let’s say the wife) who has the lower of the two scores. This may drag down the ability to qualify for a refi.

How he might qualify: remove her from the property with an Interspousal grant deed. His credit score is used and he now qualifies and signs the loan. Wife is spouting mad and husband is sweating bullets.

Escrow uses another Interspousal grant deed to put both husband and wife back on title. She is now happy again.

Situation: Opposite of my above post. According to my former real estate law professor, also a former real estate attorney and a current superior court judge, the bank qualified the home in just his name and so it would be fraud.

That made a huge impression and always stuck with me. Who am I to argue? I would never qualify a customer using that scenario.

Escrow doesn't ask questions nor do I. It is just a red flag to me.

Reply by ReneeK_MI on 2/8/13 3:08pm
Msg #454820

Alternatively, and probably in MOST cases, it's an error. n/m

Reply by Bear900/CA on 2/8/13 3:16pm
Msg #454827

Re: Alternatively, and probably in MOST cases, it's an error.

Not if they are not on the loan application. I think it's more common then you may think.

But yes, check the loan app and always ask the customer(s) if the DOT vesting is correct.

Reply by ReneeK_MI on 2/8/13 4:05pm
Msg #454842

Did you mean that the other way around?

If they are not on the app, then they wouldn't sign the Note. Actually, if they're not on the app and therefore not a borrower, AND not on title - they could stay home, lol!

If they are ON the app, then they'd be a borrower and sign the Note. If they're signing the Note and are not on the mtg - I'd definitely be calling to make sure that's the game as planned. Again, I have no clue as far as community property laws, though.

Reply by Bear900/CA on 2/8/13 4:29pm
Msg #454846

Re: Did you mean that the other way around?

Yeah, I sort of got ahead of myself. I was trying to get across that in a community property state a married person can purchase and hold property on their own. It is very common. Thanks for catching that.

Otherwise, I don't see a big deal to question title (in CA anyway) if both signers verify that's the way it should be.

The bank is not going to fund if they get docs faxed back from escrow that are incorrect. How often have we all seen that notice?

I respect that you may be in a non-community property state and I don't know the laws there or what may be a red flag to you. It just doesn't raise an eyebrow for me and I am an active mortgage broker. I tried to put together some 'make sense' scenarios from my experience signing and brokering.

Best!

Reply by Barb25 on 2/8/13 6:23pm
Msg #454871

I agee with Bear900

I don't really remember the exact circumstances because it was when I was in NY probably at least 7 or 8 years ago. There was a situation where there was a signer on the note who was not on the mortgage. He was the father of the Mortagagor. They were both on the note. But only one on the Mortgage. Meaning only one on the Deed. Actually think about it. They are want to make a second person responsible. If you would be willing to sign that would also make them happy.

Reply by Darlin_AL on 2/10/13 11:33am
Msg #455046

back to basics. folks, IMHO, don't spend your brain trying to determine the legal aspects of the mtg packages that are cranked-out all around the USA. Just make sure you get the signatures where indicated & by whose name is already shown for the line on that page of that form. If a mistake was made up the line, you may be the one called to go back & fix it (on whoever made the mistake's dime). We are not in the Title biz, or loan doc creation biz. If you suspect, after the signing, that the LO or TC did not have a complete/correct picture of the signer's(s) status you can "share" that with whoever hired you. Of course, if you suspect actual fraud--don't complete the signing, as per standard notary practice. The reason I put this out here is so the signers new to real estate transactions in general won't get the idea from this forum they need to be examining docs beyond the extent of properly identifying signers, having them sign as title is vested, & proper notarizations. Once again, this is the best forum...IMHO