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new-agent
2 Posts |
 Posted - 07/02/2008 : 5:48:35 PM
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Hi guys,
I'm new to the purchase side of the business and working on a file right now. It turns out that the bank will not let my buyer use the equity loan from his house to buy investment property.
So I have my borrower pull the money needed for down payment out of his equity line prior to closing, and instead of going through escrow, have it in his bank account. Then we will go SISA so we will not need to verify seasoning on the account and the down payment will be coming from his bank account.
Our bank does not re-pull credit at the end.
My question is - do you forsee any complications arising out of doing it this way? I already discussed with my borrower that this is the only chance and he wants to proceed.
Please let me know. Thank you. |
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SolarMTG
393 Posts |
Posted - 07/02/2008 : 5:50:44 PM
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quote:
Originally posted by new-agent
Hi guys,
I'm new to the purchase side of the business and working on a file right now. It turns out that the bank will not let my buyer use the equity loan from his house to buy investment property.
So I have my borrower pull the money needed for down payment out of his equity line prior to closing, and instead of going through escrow, have it in his bank account. Then we will go SISA so we will not need to verify seasoning on the account and the down payment will be coming from his bank account.
Our bank does not re-pull credit at the end.
My question is - do you forsee any complications arising out of doing it this way? I already discussed with my borrower that this is the only chance and he wants to proceed.
Please let me know. Thank you.
if you know the bank wont allow this and you are trying to find a way around it, you are committing loan fraud. |
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the_mortgage_guy
1194 Posts |
Posted - 07/02/2008 : 5:58:19 PM
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| I think you should show what the new payment will be with the line being drawn upon. That is the right thing to do. |
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SolarMTG
393 Posts |
Posted - 07/02/2008 : 6:11:06 PM
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quote:
Originally posted by neo-logic
quote:
[i]Originally posted by SolarMTG
if you know the bank wont allow this and you are trying to find a way around it, you are committing loan fraud.
It's a stated loan .... how can we take a moral high ground on one stated loan and bash on another type of stated loan?
the fact that it is a stated loan has nothing to do with it. but knowingly using the equity line when the UW says not to is fraud. even if you can get away with it. what would you do if the UW checks the credit as QC to make sure the borrower doesn't draw on the line and the UW finds out the borrower drew on it? |
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williamspeaking
4058 Posts |
Posted - 07/02/2008 : 6:28:12 PM
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SISA= stated income, and stated assets (assets for piti reserve purposes)
You cant state a downpayment and unless its at least 20% down, a 60 day papertrail will be required most anywher.e |
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new-agent
2 Posts |
Posted - 07/02/2008 : 6:34:18 PM
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quote:
Originally posted by williamspeaking
SISA= stated income, and stated assets (assets for piti reserve purposes)
You cant state a downpayment and unless its at least 20% down, a 60 day papertrail will be required most anywher.e
my client is putting down 35% down.
Are you saying a bank will require a paper trail on the 35% down payment? If it's coming from the bank account, and it's more than 20%, and the guidelines state that no verification is required on assets - then paper trial would no be a problem, right?
I'm just brain storming here guys. Don't judge. |
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mantixmortgage
2717 Posts |
Posted - 07/02/2008 : 7:08:51 PM
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| the problem isnt how you are trying to fenagle it with the bank account and stuff. the problem is going to be getting a sisa loan on an investment property. its within citi's guidelines but you may as well throw it away if you can't at least do siva with a ton of assets, great job history, and not to mention a history of managing rental properties |
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slants
4274 Posts |
Posted - 07/02/2008 : 7:19:20 PM
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quote:
Originally posted by new-agent
quote:
Originally posted by williamspeaking
SISA= stated income, and stated assets (assets for piti reserve purposes)
You cant state a downpayment and unless its at least 20% down, a 60 day papertrail will be required most anywher.e
my client is putting down 35% down.
Are you saying a bank will require a paper trail on the 35% down payment? If it's coming from the bank account, and it's more than 20%, and the guidelines state that no verification is required on assets - then paper trial would no be a problem, right?
I'm just brain storming here guys. Don't judge.
I'm surprised the HELOC won't be allowed as seasoned assets, obviously the occupancy is the reason. Typically, if a heloc is drawn for new purchase, the underwriter will just calculate the higher monthly payment due on the line to verify the higher DTI will qualify. Are HELOC proceeds allowed as down payment if OO? |
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vburek
522 Posts |
Posted - 07/03/2008 : 05:16:03 AM
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| I dont get this. You have a client who wishes to put down a down payment on an investment property and the lender wont let him. I dont see how that is possible. Even though the down payment is coming from home equity, the home equity is his money. It is sourced and seasoned cause it has been in the property. So, what am i missing. |
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slants
4274 Posts |
Posted - 07/03/2008 : 09:51:36 AM
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quote:
Originally posted by vburek
I dont get this. You have a client who wishes to put down a down payment on an investment property and the lender wont let him. I dont see how that is possible. Even though the down payment is coming from home equity, the home equity is his money. It is sourced and seasoned cause it has been in the property. So, what am i missing.
Much higher risk loan because not only is the borrower not risking his own cash, he is stripping equity from one house to acquire another and incurring more debt and obligations. Can't tell if he has proven landlord experience, but if not, he may very likely end up losing both properties. He is not risking hard earned savings to invest, but is borrowing money against his house to leverage. A heloc is a loan, not the same as seasoned assets. |
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hlsi
202 Posts |
Posted - 07/03/2008 : 09:57:16 AM
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Your real problem is the 1003.
The 1003 asks for the source of the downpayment and if any of the downpayment is borrowed.
Sure, on a SISA you won't have to show bank statements or source the funds. But you still have to answer those questions, and unless you lie, you don't accomplish your goal. |
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CoolMtgGuy
3704 Posts |
Posted - 07/03/2008 : 10:04:53 AM
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The equity in the home is the homeowner's. However, a loan against that equity, as in HELOC, is a liability that must be included in DTI numbers.
Assuming that the borrower's DTI can qualify, it is best to season the funds for at least 60-days or risk having to document it.
Assuming that you can get a SISA deal on a n/o/o transaction is a big assumption these days. Almost all stated deals will require a 4506 anyway ... and it will be executed prior to closing.
It is good that you ask for help with structuring your deal. Good luck with it. |
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CoolMtgGuy
3704 Posts |
Posted - 07/03/2008 : 10:08:31 AM
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Tapping of equity in ones property to use as downpayment is a legitimate source of downpayment. Not including the servicing of that is illegal, wrong, whatever.
The same is not true for tapping a credit card to make a down payment.
quote:
Originally posted by hlsi
Your real problem is the 1003.
The 1003 asks for the source of the downpayment and if any of the downpayment is borrowed.
Sure, on a SISA you won't have to show bank statements or source the funds. But you still have to answer those questions, and unless you lie, you don't accomplish your goal.
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mganovsky
2070 Posts |
Posted - 07/03/2008 : 12:13:55 PM
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Have him write the check and deposit the funds, season them for 60 days. You will need a copy of the HELOC note to submit with the loan file. Calculate the DTI by determining what the Heloc payment would be based on using the entire HELOC available funds times the Int Rate. Since the funds are seasoned in his bank account then he is not technically using a loan as down payment.
But good luck in getting a NOO SISA down in this Mortgage world. Be carefull though the lender will more than likely pull the 4506 |
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slants
4274 Posts |
Posted - 07/03/2008 : 12:18:00 PM
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quote:
Originally posted by mganovsky
Have him write the check and deposit the funds, season them for 60 days. You will need a copy of the HELOC note to submit with the loan file. Calculate the DTI by determining what the Heloc payment would be based on using the entire HELOC available funds times the Int Rate. Since the funds are seasoned in his bank account then he is not technically using a loan as down payment.
But good luck in getting a NOO SISA down in this Mortgage world. Be carefull though the lender will more than likely pull the 4506
Once the funds are seasoned 60 days on a VOD, it'll qualify SIVA. If new HELOC balance and payments are reporting on the credit report, note won't be necessary. SIVA NOO to 65% will be doable, so long as income will not be a prorblem if 4506 is pulled. |
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AK__47
745 Posts |
Posted - 07/03/2008 : 12:43:27 PM
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| I got a loan done two months ago with a simular situation through Provident. On my borrowers Primary we refinanced the whole thing and took cash out for the 20% down payment. As soon as that loan funded we did the purchase on an investment property. Both loans were through Provident, and they didnt have a problem where the down payment came from. He did have one other rental property. |
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mganovsky
2070 Posts |
Posted - 07/03/2008 : 12:57:49 PM
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| Slants; DUH you are correct if the money is seasoned ya go SIVA. |
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williamspeaking
4058 Posts |
Posted - 07/03/2008 : 1:02:16 PM
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| you can use those funds, but be sure to include the new heloc payment in your DTI. |
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slants
4274 Posts |
Posted - 07/03/2008 : 1:06:16 PM
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quote:
Originally posted by mganovsky
Slants; DUH you are correct if the money is seasoned ya go SIVA.
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