Me and husband are buying a house, 1 wk before C.O.E. lender says he wants me removed from loan AND purchase?
contract because I checked that we are involved in lawsuit on application (class action against builder of current home because of shotty work). My husband did not check it because he forgot about it since we haven't heard from the lawyer in quite awhile. This sounds like I am signing away all my rights and don't feel good about it. We have 2 kids and am worried if in the future we divorce, or he dies, or whatever I will be screwed. But we need to move very quickly. Any lenders out there who can give me advice?
2008-07-16T13:19:20Z
Expert Realtor....but even if WE are suing someone, not us being sued? There is no possible pending judgement against us. We are just suing for the builder to repair the problems with our house.
Expert86753092008-07-16T13:10:46Z
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TO MY FELLOW POSTERS...READ HER QUESTION CAREFULLY.
She is involved in a LAWSUIT...this is a STANDARD question on the 1003, and is AUTOMATIC grounds for loan denial unless they are removed from the title AND the loan.
REASON: If she is on title...a lien can be placed if she gets a judgement against her on the home....any judgement filed against a home can be foreclosed on which puts the bank interest at risk...yes the bank is in first position, but they make money on INTEREST not on principle loans.
So yes, they CAN require you to do that before they will agree to give you the loan, and will be closely monitoring the title for compliance.
The underwriter may add a contingency clause in the loan paperwork that states if anyone else but the loanholder is added to the title, the lender reserves the right to CALL THE NOTE DUE.
Many people are not familiar with the process, because it is RARE.
I would check with a real estate attorney of what your rights are to the residence should something like that happen.
In MOST states, even if the wife is not on title, if it's the primary residence, and the husband dies, it automatically goes to the wife...and she owns 50% even if they divorce...a real estate attorney will know if your state is one of them.
A lender IS NOT qualified to answer that question for you.
Do you mean they don't want you on the title? I've never heard of that kind of requirement from a lender.
Anyway, if that's the case, there is a way around this: After purchasing the home, put together a living trust. A living trust is kind of like a will, as it describes exactly what happens to all of your assets upon your death, your husband's death, or both. Once you have a living trust, the titleholder (your husband) signs a quitclaim deed transfering ownership of the property to the living trust.
Then, upon his death for example, the instructions in the trust must legally be carried out. And, if you are named as the benefactor of the house, title then reverts to you. There's no probate court, no off the wall claims of inheritance by friends or relatives, just whatever the instructions in the living trust tell the trustees (people named in the trust to carry out the instructions) are directed to do with that property.
A living trust costs anywhere from several hundred dollars to about $2000, depending on who draws it up. It takes a while to dig up all the documentation for your assets (retirement accounts, insurance policies, etc.). But, it allows *you* to dictate what happens to all of your assets when you and/or your husband die. It doesn't just fall into probate court where the attorneys siphon away all the assets and your heirs get screwed.
My best advice is that you talk with a title company's attorney, or some other real estate attorney.
If you are on the purchase contract, then you must also be on the loan. All lenders of whom I am aware require this. That means that you must be removed from both documents.
As far as ownership goes, your husband can always use a Quit Claim Deed to get you back on the title of the home. At that point, you will own part of the home, but none of the debt on the home. You can create a Quit Claim Deed right at settlement, and it should cost you very little.
Again, call a title company for more advice on this, as there are things to be considered in this situation, and I am certainly no attorney.
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Loan paperwork doesnt make any difference. As long as you get put on title at close, all your rights are still there. Its probably actually better for you because if the house ever gets forclosed on, your credit will still be good and if you are on title, he cant sell without your signature