Home Loan Approval: American Dream or Nightmare
by Tina from Austin, TX and by Mara from Lebanon, NH
Ask Kate about your home loan approval: When does the American dream turn into a nightmare? When your mortgage is called due and payable, in spite of making your house payments on time. Meet Tina who is being required to re-sign loan documents 16 months after her mortgage closed. Then there's Mara whose bank is foreclosing on her construction loan in absence of a certificate of occupancy.
Ask Kate: Re-signing mortgage documents 16 months after home equity loan closed By Tina K. from Austin, TX
I closed a loan with mortgage company over 16 months ago. I know that I signed an "Errors and Omissions" form and it's probable that I'll need to re-sign some documents but here's the deal.
I live in Texas, the refinance was of a Texas Home Equity refinance and in Texas once a home equity always a home equity.
The mortgage company had me sign a note and deed of trust that was a standard form and not for a home equity refinance so they want me to re-sign these forms.
But......they sent over 40 pages of docs to sign. It looks like it's everything that was in the package for the first closing but some of those docs are NOT pertinent at this time 16 months later. For instance the affidavit of homestead, its not my homestead anymore, this is just one. They are also wanting me to give them my financial documents AGAIN, and allow them to pull my tax returns AGAIN.
I am not comfortable signing all of this, and now I worry that if I don't they might call my note due, or not do it right again then I would have 2 notes against my property when there should only be one.
What should I do, and what am I required to do so that they don't call my note due.
P.S. I was a mortgage broker over 20 years ago so I know most of the language, just not the new laws and rules.
Kate's Answer: Re-signing mortgage documents 16 months after home equity loan closed
Re-signing loan documents almost a year and a half after your financing closed? In Texas? For a home equity loan? And re-qualifying?
Whoa! I'd be skittish too!
Texas Department of Savings and Mortgage Lending
Your state has unique laws when it comes to refinancing a home. But I am not qualified to interpret them. However, you may find your state's website, Texas Department of Savings and Mortgage Lending
, is helpful.
Scour Your Promissory Note
You could also scour your Promissory Note for verbiage allowing a lender to call your note due and ask the lender why new financial paperwork is needed.
You could also be cautious about signing new loan documents (especially when they are no longer applicable!) and ask if turning over fresh tax returns could adversely modify your existing home loan approval.
Attorney Consultation: Pronto
Either way, here's what I'd do pronto
! Shop for an attorney that specializes in real estate and mortgage financing. Then call for a consultation and get the ball rolling to protect your home and mortgage.
Lenders are often intimidated by attorneys. Who know? One letter from an attorney and this nightmare might vanish. Even if it doesn't, you'll have a pro on your side who knows how to cut through this excessive red tape.
Ask Kate: New Construction, Passed Final Inspection, No Certificate of Occupancy, Loan Due and Payable By Mara from Lebanon, NH
Our house passed its final inspection end of 2013. But we were denied a certificate of occupancy (CO) due to final grading of property not finished??
We talked with officials, we got upset with officials, we eventually tried to do what they asked. Upon doing what they asked, we were still denied a CO??
We stressed how important it was to get our CO to close the construction loan.
The loan matured December 2014, after several extensions. We just received a letter from the bank showing options for us to lose our house, a third party short sale being one.
Why do we have to lose our house? We have been making all the house payments, never late, property was deemed safe by final inspection but no CO granted.
Even the bank's own inspector stated there were no safety concerns with building, and passed the banks own inspection.
I smell a rat somewhere in this process, please help.
Kate's Answer: New Construction, Passed Final Inspection, No Certificate of Occupancy, Loan Due and Payable
The process of getting a certificate of occupancy to close a mortgage transaction is often bumpy. But in most cases, you gotta get one!
Certificate of Occupancy: Grading
I can remember a short-term construction loan that could not convert to a permanent loan over incomplete grading. (Who knows? Maybe grading is a catch-all condition.) At the eleventh hour, the CO came floating in and just before the rate lock expired
, the construction loan was paid off.
Certificate of Occupancy: Potable Water
But another transaction DID close without a CO even though there was no potable water. (I've always wondered if the homeowner was able to resolve the lack of healthy drinking water without a legal battle.)
What do these two transactions with opposite outcomes share? Hours of elbow grease. Incessant nagging. Day. And. Night. Until. Solved.
I'm certainly not saying you haven't been diligent. I'm urging you to be even more
diligent. Fight for this! Show up at the county office where COs are issued. Call your mayor. Call the local building commissioner. Stir up a hornet's nest. Go public, like I told this disabled vet
Get started here: How to Contact Washington DC and Your State Government
About the Short Sale "Option"
And by the way, the bank's suggestion to sell your house in a short sale transaction
is ludicrous, in my opinion. No home buyer in need of a mortgage can finance your home without a certificate of occupancy. I'm sure you also don't think much of their "option" for the dream house you just built!
More on Certificate of Occupancy from Ask Kate
Cheryl from Atlanta, Georgia needs to locate the certificate of occupancy to close her mortgage transaction ASAP: The Certificate of Occupancy
I've often been asked if a certificate of occupancy is necessary when refinancing. The following story stands out in my mind. It was an extremely stormy day when my appraiser returned to the office with a dazed look... Certificate of Occupancy: Surprise! It's a Barn!
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