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Old 06-14-2008, 06:33 PM
 
17 posts, read 107,664 times
Reputation: 24

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I am shaking as I'm typing this just thinking that our gift of equity was used as a down payment towards the home we already had been living before we did this closing in 8/2007. My parents owned the home for about 4 yrs & we lived with them in the home for about 3. We assumed all mortgage, taxes & insurance payments from them while living there as proven to this certain lender thru canceled checks & documentation once we contacted them about my parents desire to have this home put in our name & gift us whatever equity may have been accumulated. It sounded simple enough! As per lender! Original sale price in 2004 - 149,900 ; Appraised @ 200,000 at time of closing in 2007. This was our ( parents, self & husband) understanding as made to seem by lender: 50,000 in equity to be gifted to us & using 10,000 of it for closing thus we would be left with 40,000 either rolling over into "our " new mortgage of 160,000 or recieving it at closing. Closing ended up being extremely long & confusing due to Attorney being confused once the time came to make out the checks. Wasn't sure who got what & in what amounts, specifically over the 40,000 left. Mind you , the lender representative had left within the first 10 min. of the closing excusing herself after handing us a lovely "welcome" basket. Attorney was also representing "All" of us since we were all "Family". Title person was lady who worked for attorney's husband who owns title company! If you're asking yourself why asking this now after one yr it's because we contacted lender for preapproval to purchase a second home, which they immediately sent us a pre-approval letter however, when we called back to tell them that we wanted to use the equity they said the house had to appraise for at least 230,000 now. I then said, "wait a minute" we still have the gift of equity in there! Then the stuttering & " I don't have the file in front of me" came into play, "call me on monday"! WE pulled all the loan, closing & HUD settlement papers (3 diff. HUD papers I may add!) and numbers are diff. in each. Don't add up! Downpayment doesn't appear on any of the HUD's or GFE but singley appears on a GFE form prepared on 8/13/07 and sent to us via USPS after closing of 8/17/07 tucked within copies of all other closing forms! So we paid 47,136.46 towards funds needed to close for a home that my parents intended to sell to us for the original amount paid 3 yrs earlier of 149,900. AND we were already victims of predatory lending when the house was first purchased! A whopping 11,000 dollars in closing costs!That my husband & I funded also!! We told them the tactics used in the first ordeal with the original lender of the house before it was bought by them & they seemed very sincere in promising that this would not be the case! NEVER was anything about gift of equity going towards downpayment other than 10,000 for closing costs were gonna be pulled from it!!! In fact, the word "Downpayment" never ever came up!!!! "Oh, it's family! It's simple transaction" was the nonchalant attitude! If we would of known of a downpayment, we certainly wouldn't have agreed to pay 20% downpayment for a 149,900 dollar home we were already bamboozled on! If anything we would have negotiated for a much lower down payment or taken the cash out refi as we thought they were doing & bought a diff. home to our liking at this time instead of waiting 1-2 yrs as planned! And yes, my husband & I have very good credit in case you're just wondering. Why would my parents sell us the home for 200,000 and have that equity taken by a lender and not by us as a cash gift? It wouldn't make sense & was not any of our intentions! Now we have to wait till monday to call this lender mrtgage mgr. & get this possible nightmare scenario told to us! Impending doom!!!! I feel like throwing up!!!! Please, please send me your advise, questions or thoughts! Any help would be kindly appreciated!!!
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Old 06-14-2008, 10:16 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,098,079 times
Reputation: 952
A gift of equity is when a family member literally gifts you the equity to be used as a down payment. You cannot purchase a family members home using a gift of equity and cash that equity out at closing. Because of this there is no way that the home could have been sold to you for the original purchase price of $149,900, as there would be no equity to gift in that transaction. The original LO should have explained to you the fundamental difference between a cash out refi and a non-arms length purchase using a gift of equity.
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Old 06-14-2008, 11:36 PM
 
3 posts, read 24,610 times
Reputation: 10
I have read the post three times and need clarity

Did you finance $160k or $200k
If you financed $200k where did the $40k go

If you financed for $160k why do they want you to have an appraisal for $230k now?

There is no way that the lender can legally keep that 40k if thats what you are saying happened. If they did get an attorney now.

Brian
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Old 06-15-2008, 06:46 AM
 
17 posts, read 107,664 times
Reputation: 24
Default Hud-1

On one of the HUD-1 forms the contract sales price appears as 200,000 with a principal amount of new loan as 160,000 ; Gift of Equity typed in for 40,000 ; Sellers Concession typed in as 10,000; Total paid by/for borrower 210,000 ; cash to seller 42,789.39

On another HUD-1 form the contract sales price appears as 157,210.61 with a principal amount of new loan as 160,000 ; Gift of Equity typed in but numerical amount left blank ; Sellers Concession 10,000; Total paid by/for borrower 170,000 ; Cash to borrower 1,953.30 ; No cash to seller posted

AND on another HUD-1 form posted on their site is the first one I listed here plus another one with amounts crossed off and done over and wording of Sellers Concessions is crossed off and Seller credit for Prepaids & Closing Costs is handwritten in. Numbers are off also however this one appears stamped as Preliminary HUD Reviewed by (initials) and date.

Thanks for responding so quickly Brian!

Michelle
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Old 06-15-2008, 06:55 AM
 
17 posts, read 107,664 times
Reputation: 24
No difference explained, LO went straight to that particular process! Proceeded as if that was the usual & only procedure. No options! I think we should have been explained this so we could have made an informed & wise decision. Certainly we would have put it towards a different home at the time if that were the case. I already had bad feelings about this home due to the first catastrophe with the first closing and never was able to warm up to the house.
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Old 06-15-2008, 06:57 AM
 
17 posts, read 107,664 times
Reputation: 24
Thanks for your insight also!.....Michelle
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Old 06-16-2008, 07:28 AM
 
4,542 posts, read 11,547,065 times
Reputation: 3063
Quote:
Originally Posted by missypach View Post
On one of the HUD-1 forms the contract sales price appears as 200,000 with a principal amount of new loan as 160,000 ; Gift of Equity typed in for 40,000 ; Sellers Concession typed in as 10,000; Total paid by/for borrower 210,000 ; cash to seller 42,789.39

On another HUD-1 form the contract sales price appears as 157,210.61 with a principal amount of new loan as 160,000 ; Gift of Equity typed in but numerical amount left blank ; Sellers Concession 10,000; Total paid by/for borrower 170,000 ; Cash to borrower 1,953.30 ; No cash to seller posted

AND on another HUD-1 form posted on their site is the first one I listed here plus another one with amounts crossed off and done over and wording of Sellers Concessions is crossed off and Seller credit for Prepaids & Closing Costs is handwritten in. Numbers are off also however this one appears stamped as Preliminary HUD Reviewed by (initials) and date.

Thanks for responding so quickly Brian!

Michelle
OMG

You only signed one HUD right??
Is your loan amount $160K or $200K?
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Old 06-16-2008, 08:36 AM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,098,079 times
Reputation: 952
Quote:
Originally Posted by TimtheGuy View Post
OMG

You only signed one HUD right??
Is your loan amount $160K or $200K?
From what I can gather the loan amount is $160K. The difference between the HUD's is the cash to seller, as one says $40K+ and one makes no mention of it.
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Old 06-16-2008, 09:05 AM
 
4,542 posts, read 11,547,065 times
Reputation: 3063
Quote:
AND we were already victims of predatory lending when the house was first purchased!
While some folks are truly "victims of predatory lending", this phrase sure gets thrown around a lot. I would think you would have been a little more diligent this time around.

As far as the 2nd home purchase....you don't have enough equity to be pulling any out for a new purchase. If the house is worth $200k and you owe $160k you are at 80% LTV. Most lenders are not going to go beyond that today as far as pulling equity out. They may go to 90% which would give you $20k to work with. I would imagine that is where the $230k figure is coming from. They want to see a much higher value to allow you to pull any equity out.

As far as requiring an appraised value of $230k for you to use the equity to purchase a 2nd home...this sounds about right if you current loan amount is $160k. And to tell you the truth, depending on where you live your house is probably worth less now than it was in 2007.
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Old 06-18-2008, 06:57 PM
 
17 posts, read 107,664 times
Reputation: 24
you're probably right! This is NY & nothing is selling $ no one is buying!
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