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A family member is purchasing a house from another family member. The mortgage company is requesting that the contract be amended to include a line in the special instructions section stating “Seller is Buyers grandmother. This is not an arms length transaction.”
What risk/benefit would such a statement offer either party to the contract? Why would the mortgage company desire such language be added?
Lender is disclaiming any responsibility for side deals in the family.
Good note if they are reselling the loan.
Wouldn’t a signed declaration in the closing packet for that purpose make more sense than a purchase contract amendment that doesn’t seem to affect the terms of the sale?
Wouldn’t a signed declaration in the closing packet for that purpose make more sense than a purchase contract amendment that doesn’t seem to affect the terms of the sale?
A lot of things that lenders want don't make sense. But you comply if you want the money. It's that simple.
Lender is disclaiming any responsibility for side deals in the family.
Good note if they are reselling the loan.
Quote:
Originally Posted by johnrex62
Wouldn’t a signed declaration in the closing packet for that purpose make more sense than a purchase contract amendment that doesn’t seem to affect the terms of the sale?
Hmm.
It may also be notice to the appraiser, as that is material information to them?
I do get curious, so I asked on an appraisers' forum:
"A question springing from another forum. Not my problem, but I am curious. FWIW, this is in Texas.
Grandma's house being sold to grandchild.
Lender required a note in the purchase contract, "Seller is Buyers grandmother. This is not an arms' length transaction."
Why? I guessed that is material information to the appraiser? Am I on the right track with that?"
I do lots of non arms lengths transactions and have never required such language on the contract.
He may be doing the loan from one of the big banks like Chase. They come up with stuff the average loan does not require. Sometimes it makes you shake your head.
Not a big deal. Best to disclose any relationships so they don't think there is anything underhanded.
Hmm.
It may also be notice to the appraiser, as that is material information to them?
This is needed by Underwriting.
The appraisal also has this noted and that must be corrected.
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Arms length transaction
