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#20302 - 06/11/02 02:53 PM Correct LTV on Real Estate Loans Edit
PAULA Offline
New Poster
Joined: Mar 2002
Posts: 5
Originally posted in general forum:

Situation: Customer is having property conveyed to him from child. A new note is being generated for x amount of dollars which is the payoff and the "purchase price". The appraised value is x amount above purchase price.

Question: Would you treat this transaction as a purchase or a refinance to determine the LTV.

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Lending Compliance
#20303 - 06/11/02 03:39 PM Re: Correct LTV on Real Estate Loans Edit
Lestie G Offline

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Joined: May 2002
Posts: 3,608
Near the Land of Enchantment
I'd treat it as a purchase - your borrower is paying money to have title transferred to him.
Opinions my own.

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#20304 - 06/11/02 09:28 PM Re: Correct LTV on Real Estate Loans Edit

I would treat the transaction as a purchase, as lglover indicated. Since there is a transfer of title and a fee paid accordingly. You should, however, discuss this with your lender if it is a secondary market loan. The last one we did was a purchase and the difference between what the house sold for and the actual market value was noted as a 'gift' and a gift affidavit signed. You should talk with your end loan provider to make sure you are in agreement there or you may be buying the loan back.

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#20305 - 06/11/02 09:42 PM Re: Correct LTV on Real Estate Loans Edit
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,765
Central City, NE
Did your customer have any ownership interest before? If not, this is definitely a purchase. If your customer owned a percent and is now acquiring 100%, this is a refinance. See the commentary to the definition of "residential mortgage transaction" in TIL for an example.
David Dickinson

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