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#2245314 - 11/09/20 08:15 PM Purchase or Refinance
Likes to Comply Offline
Diamond Poster
Joined: Nov 2008
Posts: 1,049
In the mountains
Mother and Daughter have a mortgage loan secured by Mother's home. Mother dies and Daughter and other family members inherit the home. Mother and Daughter's mortgage loan is maturing. Daughter has applied with John Doe (LO thinks that John Doe is NOT one of the family members who has an ownership interest - this loan was declined so we don't have all the details) for a loan to pay off the maturing loan and for cash out to buy out the other family members with an ownership interest. The new mortgage would be titled in the Daughter and John Doe's name.

Is this a purchase or a refinance?
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#2245321 - 11/09/20 08:36 PM Re: Purchase or Refinance Likes to Comply
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 39,557
Cape Cod
She already has an ownership interest. It's a cash-out refinance application.
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#2245531 - 11/14/20 12:47 AM Re: Purchase or Refinance Likes to Comply
Adam Witmer Offline
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Joined: Sep 2010
Posts: 2,612
I agree with John. From the commentary:

"4. Same borrower. Section 1003.2(p) provides that, even if all of the other requirements of § 1003.2(p) are met, a closed-end mortgage loan or an open-end line of credit is not a refinancing unless the same borrower undertakes both the existing and the new obligation(s). Under § 1003.2(p), the “same borrower” undertakes both the existing and the new obligation(s) even if only one borrower is the same on both obligations. For example, assume that an existing closed-end mortgage loan (obligation X) is satisfied and replaced by a new closed-end mortgage loan (obligation Y). If borrowers A and B both are obligated on obligation X, and only borrower B is obligated on obligation Y, then obligation Y is a refinancing under § 1003.2(p), assuming the other requirements of § 1003.2(p) are met, because borrower B is obligated on both transactions. On the other hand, if only borrower A is obligated on obligation X, and only borrower B is obligated on obligation Y, then obligation Y is not a refinancing under§ 1003.2(p). For example, assume that two spouses are divorcing. If both spouses are obligated on obligation X, but only one spouse is obligated on obligation Y, then obligation Y is a refinancing under § 1003.2(p), assuming the other requirements of § 1003.2(p) are met. On the other hand, if only spouse A is obligated on obligation X, and only spouse B is obligated on obligation Y, then obligation Y is not a refinancing under § 1003.2(p). See § 1003.4(a)(3) and related commentary for guidance about how to report the loan purpose of such transactions, if they are not otherwise excluded under § 1003.3(c)."
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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