The most common question that I was asked this past week was "What are the consequences of co-signing for someone else’s mortgage"?

In 2010, if a someone looking to buy a home and they do not qualify because their income is too low, a non occupying co-borrower is a great solution, but it does come with serious responsibilities for the co-borrower and serious concerns for the home purchaser.

The first thing to address is the term "co-signor" vs. "Co-borrower". When you sign for someone else you are co-borrower with equal ownership and equal responsibility to repay the loan. It is not like the traditional co-signor relationship where if the loan were to default then you have to step up to the plate and pay it back, you are equally responsible. That means that the loan is on your credit report, if it is late, then you will be reported as late.

Let us answer the questions that come up:

How will this affect my credit?

This loan will be listed on your credit along with all of your other debts. If it is paid on time it will build your score. If it is paid late, it will harm your score.

Will only 1/2 the loan be my responsibility and only that portion be on my credit report?

Since you are an equal; partner in this mortgage debt, your credit report will reflect the entire liability, just like the primary borrower.

If I want to buy a house in the future, Will I be able to qualify for another mortgage if this mortgage is on my credit report?

If the loan is being paid on time, and the other party’s check is paying the loan and you can prove 12 months cancelled checks from the other party, then this debt is excluded from the debt ratio. Now this is a current mortgage qualification guideline. As we have seen in the last 18 months there have been tougher restrictions on qualifications for a mortgage, so this may change, although I haven’t heard anything yet.

For how many years am I responsible

You are responsible for as long as the loan lasts.

If I have a co borrower, what happens if something happens to me, will they now "inherit" or "own" my house?

This is a great question. My answer is to speak to your attorney. There can be issues and they should be addressed up front. Your attorney should advise you on these sensitive issues.

How will this debt affect my debt-to-income ratio on other credit that I may have?

This debt will be on your credit report and can affect your ability to get credit.

Will I be considered a “First Time Home Buyer” if I am a co-borrower?

Some First time homebuyers programs only check to see if you have claimed the mortgage interest deduction on your tax return. So if you aren’t paying the mortgage and you do not claim the interest, you may still qualify. I would say that you should go into this assuming that you wouldn’t qualify and if you want to buy a home down the road, look into each available program at that time.

If I have poor credit, will a co-borrower with great credit help me?

We qualify customers based on the lower middle score of all the borrowers. So while a co-borrower with great credit is great, it won’t mitigate the fact that your credit is poor.

Who is the best candidate to be a non-occupying co-borrower?

In my opinion, someone who is very close to you, preferably a close family member like a parent or grandparent.

If you have any questions regarding any mortgage issue, contact Ann Zeilingold, Branch Manager of First Meridian Mortgage Corp. Licensed Mortgage Banker NY, NJ, CT, PA banking departments. 1609 Route 202, Pomona NY 10970. 845-354-9700 or azeilingold@yahoo.com.

The governments tax credit incentive is over this today. April 30 is the deadline to have a fully signed contract. This doesn’t mean that the purchasing of homes is over. The first time homebuyer is the foundation to the healing of the economy. When someone buys a home, they move, they fix the home and garden, etc. They use the services of contractors, gardeners, and movers. They shop at hardware stores, furniture stores and the vast and sundry retail and discount stores that sell household items. This causes an economic ripple affect that’s stimulates the economy. Buying a home, though, can be real scary especially today with all the negative news. A first time homebuyer may be scared to take themselves this huge step.

There are so many things to consider. That’s why a homebuyer seminar in our area is so crucial. Education is key and valuable information is priceless.

What you will learn at the First Time Home-buyer’s Seminar:

1. Credit. The importance of a good credit score. The components of your credit score and multiple strategies on how you can boost your credit score. A difference between one point on your credit score can cost you on a $400,000 mortgage an additional $4,000 up front and over $90,000 over the life of the loan!!
2. Processes and Procedures: What do you do first? What steps do you need to take when you decide to explore the possibility of purchasing a home? How do you choose a Realtor? A mortgage Professional? Who else do you need to contact?
3. The Mortgage: What is a pre-approval? What is a Pre-qualification? What information do you need to obtain this document? What paperwork do you need to save and how much money should you be prepared to spend on this purchase? All these questions will be answered
4. Budgeting: When you buy a home it is very important to learn how do budget. Doing a simple budget will make it very clear if you are ready to buy.
5. The benefits of homeownership. Understanding the tax deductibility factor of mortgage interest.

I am please to announce that I am holding two First Time Home Buyers seminars. One on Tuesday evening, May 11 at my office, 7:00pm at 1609 Route 202, Pomona NY 10970 and the second on June1, at the Finkelstein Memorial Library, 7:00 pm at 24 Chestnut Street, Spring Valley, NY 10977. Please RSVP 845-354-9700 or azeilingold@fmm.com.

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The governments tax credit incentive is over this today. April 30 is the deadline to have a fully signed contract. This doesn’t mean that the purchasing of homes is over. The first time homebuyer is the foundation to the healing of the economy. When someone buys a home, they move, they fix the home and garden, etc. They use the services of contractors, gardeners, and movers. They shop at hardware stores, furniture stores and the vast and sundry retail and discount stores that sell household items. This causes an economic ripple affect that’s stimulates the economy. Buying a home, though, can be real scary especially today with all the negative news. A first time homebuyer may be scared to take themselves this huge step.

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There are so many things to consider. That’s why a homebuyer seminar in our area is so crucial. Education is key and valuable information is priceless.

What you will learn at the First Time Home-buyer’s Seminar:

<!--[if !supportEmptyParas]--> <!--[endif]-->

1. Credit. The importance of a good credit score. The components of your credit score and multiple strategies on how you can boost your credit score. A difference between one point on your credit score can cost you on a $400,000 mortgage an additional $4,000 up front and over $90,000 over the life of the loan!!
2. Processes and Procedures: What do you do first? What steps do you need to take when you decide to explore the possibility of purchasing a home? How do you choose a Realtor? A mortgage Professional? Who else do you need to contact?
3. The Mortgage: What is a pre-approval? What is a Pre-qualification? What information do you need to obtain this document? What paperwork do you need to save and how much money should you be prepared to spend on this purchase? All these questions will be answered
4. Budgeting: When you buy a home it is very important to learn how do budget. Doing a simple budget will make it very clear if you are ready to buy.
5. The benefits of homeownership. Understanding the tax deductibility factor of mortgage interest.

<!--[if !supportEmptyParas]--> <!--[endif]-->

I am please to announce that I am holding two First Time Home Buyers seminars. One on Tuesday evening, May 11 at my office, 7:00pm at 1609 Route 202, Pomona NY 10970 and the second on June1, at the Finkelstein Memorial Library, 7:00 pm at 24 Chestnut Street, Spring Valley, NY 10977. Please RSVP 845-354-9700 or azeilingold@fmm.com.

<!--[if !supportEmptyParas]--> <!--[endif]-->

<!--[if !supportEmptyParas]--> <!--[endif]-->

Word to the wise, if you are purchasing a foreclosure that is winterized, try to arrange for the appraiser to go to the house when the utilities are on. Other wise, you will have to pay for the appraiser to go a second time to certify that the utilities are on and functioning. Dorit Katz, a local REO agent for Realty Teams in Pomona says, "The bank will pay to have the home de-winterized temporarily, once the contract is signed, if there is a clause in the contract subject to a home inspection. Therefore, she suggests having the appraiser go into the house a day after the inspection so that it can be canceled if the home fails inspection."

Last Friday, we were hit with a momma of a snowstorm with very windy conditions causing numerous power outages. Thank You G-D for that storm!!

We had a foreclosure purchase deal in our office. The file was the epitome of "Murphy’s Law". The home “under appraised”. The client’s tax returns were filed late causing a needless denial because the IRS showed no records of any return being filed, which we then reversed. The underwriter questioned the assets and the income because our client was complicated. We worked through all the issues. Our file was 287 pages thick!!! Then we got hit with a deadline. The attorney asked for an extension and was denied. We were informed that the deal was off if this file did not close by February 26, because the foreclosure bank wanted to move on and was actually changing attorneys offices because they had transferred all their unsold properties to another entity. What a Mess!! This all happened On February 19^th. The only condition left was that the appraiser had to go to the home to verify that it was de-winterized. A whole chain of events had to happen. The Realtor had to schedule the plumber to do the job, and then we had to schedule the appraiser through a management company, who then had to schedule the appraiser, who then had to submit the report to the Management Company, who after review would email it to me. The earliest we could get the appraiser into the house was Wednesday and the Management Company only gave us the appraisal on Thursday evening. Underwriting cleared the file Friday morning but we couldn’t get the closing documents until Monday or Tuesday. We ran out of time. Then we had SNOW!!

Because of the bad weather and power outages, we got an extension and the file is closing day!! Whew that was a close call!!

I guess the lesson of the day is: To close a mortgage today, it takes not only skill, but also good LUCK!!

As crazy as it seems, in the Banking world this seems to be the norm.
Let me give you some real life mortgage examples; I was working on a mortgage for clients purchasing short-sale and we had already had a commitment. I, and my client think, that we will be closing in 2 to 3 days. My client's attorney gets an email from the seller's attorney that the house was foreclosed on the day before and the deal is off!! It seems that the loss mitigation department didn't notify the attorney handling the foreclosure to cancel the auction!! Scary!!

Then I had a client purchasing a foreclosure. We were all set up to close and the documents had already been sent to the closing escrow agent, but when the bank tried to order the wire, the warehouse bank (this is how mortgages are funded, there is a wire from a lenders warehouse line of credit) the warehouse line bank said that this particular lender was not approved by this warehouse bank for FHA loans, so the lender had to scramble to get the approval they needed. They had to change fraud scan companies, provide the resume of their underwriters and electronically send the file to the warehouse bank for their review. What a mess!! Well it took one week and then we finally closed.

The worst was back in 2008, when I did a condo purchase mortgage through Chase. The night before the closing at 4:45 pm, I get a call from my AE that the file cannot close with 3% down as committed, but with 5% down since they couldn't get PMI because their score was under 620. This is the night before closing. Then they said that the clients don't have enough funds to close anymore. This one took more ingenuity to solve. 3% programs had already been deleted from the available programs; the clients didn't have more money. I re ran credit and got a 6:40 score, I had Chase send it to another PMI company (Thank You RMIC for saving the day) and we closed 3 days later. I asked Chase, how do you issue a commitment and clear a file to close without finalizing the PMI? They said, that they usually do this before issuing the commitment and for some reason on this file they didn't.

Well there you have it, incompetence at work.

This is why you need to deal with experienced, knowledgeable and tenacious professionals on the street level. Going to "Brand Name Bank" isn't the answer all the time. The three banks in the 3 stories above were large well-known banks, Countrywide, BOA and Chase. A personal observation: I have found that the larger the bank and the stronger their "brand" the less likely they are to work for the average Joe and Jane homeowner. I really feel the people that you work with on the frontline is the key to a positive and successful home financing.