isn't deed of trust from 2nd loan considered a lien? (California, approval)

[christeen]

Another paranoid question from the first-time home buyer . . .

Our loan processor insists we do not have to list our second loan on one of our disclosure forms. The form is "Additional Required California Disclosures" (RE 883). It says to list "Liens that will remain or are anticipated on this property after the proposed loan for which you are applying is made or arranged (including the proposed loan for which you are applying).:

The processor lists the loan she's processing for us, but says the lender (Amtrust) does not want us to include the second loan from husband's employer because it is not yet a debt that should be listed under current liabilities. (On employer loan, all payments are deferred for 10 years and interest forgiven every year after 5 years while husband is employed).

To me, the question does not ask what liabilities will exist after the loan is made, but what liens will be on the property. I pointed out the employer loan requires him to sign a Deed of Trust to secure the promissory note, but she insists it still does not get listed.

Since we're the one's on the hook when it comes to filling out this application, I'm really nervous about what she's filled out and I know she's sick of my questioning her work (there were a few smaller errors she's fixed). Is her understanding of the form correct and/or is this industry practice?

Thanks for any feedback!

[Rose Red]

Is the money to be used for the purchase of the loan? Will the loan have to be paid back in the event that your husband is no longer working for that company? If yes and yes.

Back when I was processing (I haven't been in the business since early 2005) the loan had to be listed and needed to be included in your debt to income ratio. Cover yourself and list the loan.

Some others may have a different view point but that is how I would handle it. The processor may be avoiding additional conditions from the lender - meaning - the lender may ask for a copy of the note that will be recorded.

Botom line it's your name on the application I would include it and just be prepared for any additional lender conditions.

[christeen]

Originally Posted by Rose Red

Is the money to be used for the purchase of the loan? Will the loan have to be paid back in the event that your husband is no longer working for that company? If yes and yes.

Back when I was processing (I haven't been in the business since early 2005) the loan had to be listed and needed to be included in your debt to income ratio. Cover yourself and list the loan.

Some others may have a different view point but that is how I would handle it. The processor may be avoiding additional conditions from the lender - meaning - the lender may ask for a copy of the note that will be recorded.

Botom line it's your name on the application I would include it and just be prepared for any additional lender conditions.

Thanks so much for your help. Yes, the employer loan is for purchasing the home. And yes, he must pay the entire loan if he stops working early. Otherwise, after 10 years he owes the entire principal amount but interest is forgiven.

The processor did use the monthly payments for the employer loan in qualifying us for the primary Amtrust loan. The employer loan payments as a monthly cost spread over 10 years is listed as "Other Financing (P&I)" on the Monthly Income & Expense section of the 1003 Loan Application. But she said the employer loan does not to be listed on this other document at issue.

I just don't understand why the lender would not want this listed and she's not explaining it well, at least to this layperson. I can't imagine what type of loan should be listed, if not this one. I'll ask our broker, but he tends to defer to the processor on how to complete the paperwork.

I'm inclined to insist she add it on, but don't want to risk our loan approval for something in fact should not have been included. I just want to know with certainty if I do or not. I appreciate your insights.

[Gabriela Valadez]

How to find the owner's name of a property?

[Gabriela Valadez]

How to find the name of the owner of a property in Miami?