Borrower Information

Borrowers – Conventional Mortgage

Remember, these are the rules I follow for borrowers in Kentucky.  These guidelines are my interpretation of the mortgage mumbo jumbo, not the same as laid out in the Fannie Mae Selling Guide. 

I can only lend money to individual applicants/borrowers. An applicant is a person that applies for a loan secured by residential real estate. If there are more than one applicants then one of them is referred to as the Primary Borrower or just plain Borrower.  Usually, the Borrower is also the primary wage earner, but that is not always the case.  The Applicants decide who will be the Borrower.

The Borrower is the one obligated to repay the loan. Co-Borrowers are also obligated if they sign the note and mortgage.  All of the applicants must meet the eligibility requirements for the type of loan they apply for, but their rights are also protected by the  Equal Credit Opportunity Act (ECOA).

All of the applicants must be natural persons.  I can’t lend to corporations, trusts or partnerships, only live people.  No, a living trust or LLC is not a living peep. 

All of the borrowers must be old enough to sign a note and mortgage. 

Everyone that is going to be on the loan application as a Borrower or Co-Borrower must be a U.S. citizen or a permanent resident alien or non-permanent alien.  They must also have a valid social security number.  A borrower without a social security number cannot get a credit report therefore cannot be eligible for a loan.  

It doesn’t matter how you take title to the property as long as the title is vested to a real person.  In other words the form of title isn’t important as long as it is to real people, not partnerships, trusts or corporations.  The individuals can take title as with or without right of survivorship.

Borrowers must obtain or already have fee simple title to the property they want to mortgage.  Theoretically, it is possible to mortgage properties held in a leasehold estate or land lease but I have never closed such an animal. 

All of the Borrowers must sign the note and mortgage.  An individual can have an ownership position of the property and not on the note, therefore not obligated or liable for the repayment of the loan.  If an owner is not on the note they must sign the mortgage and deed to acknowledge they are aware of the debt secured by the property.

Here is some additional information on Co-Borrowers.

 

 

Co-Borrowers

Co-Borrower We have already touched on Co-Borrowers but I thought a little more detail may help. The title “Co-Borrowers” refers to the joint applicants, not the relationship between the parties.  A husband and wife may be Co-Borrowers or just one of them might be the Borrower if the income of the other is not used …

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Citizens and Non-Citizens

Mortgages for Citizens of U.S. Territories  Citizens of U.S. Territories basically have the same rights as U.S. citizens therefore the same guidelines apply.  The tricky part is the same documentation is required as any other loan application, no credit report or tax returns equals no loan.  I have only run across this once in the …

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Power of Attorney

Power of Attorney (POA) Oh boy! Here we go!  Prior to last year I can count on one hand the number of times a buyer needed to use a power of attorney (POA) at a real estate closing.  This year it seems like one out of four loan applicants ask about using a POA. Here’s …

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