• If the loan request is for a junior loan , information about the senior loans will be required . Documents for review may include a copy of the promissory note , loan agreements , and a recent payment statement from the senior lien holder or loan servicer . Reviewing the recorded documents related to the senior lien associated with the deed of trust is prudent .
• Does the first lien have a written provision in the deed of trust referred to as an “ alienation clause ” or a “ due on further encumbrance clause ” that would require the lender to obtain written approval to place a junior lien on the property ? If the loan agent is working on a second lien loan , they should review the deed of trust and the loan agreement to see if
obtained in the past . Completing a property sale “ subject to ” means that the purchaser / borrower purposefully failed to notify the first lien holder of the transfer . Was the sale transfer kept a secret , deliberately to get a lower interest rate ? Therefore , the loan documents still show the obligor as the prior owner on the note and deed of trust .
• Does the person requesting the loan have the sole authority to borrow and encumber the property with a new lien ? Are there other parties of interest who may object to recording a lien on the property ? An estranged exhusband , exwife , business partner , or trust beneficiary would be an example .
• Are there multiple borrower parties that a lender must include in the signed the documents . Verifying the proper parties is part of their insurance underwriter and approval process .
• Additional documentation may be required to drive the process forward as a loan processor sets up their file . The loan agent should maintain a respectful and enthusiastic relationship with the processor .
Sifting Through the Maze of Questions and Answers to Develop a Wellwritten Executive Summary to Send to the Lender
Loan agents ask prospective borrowers questions to determine the transaction ’ s viability . They are responsible for obtaining specific information from the borrower or the borrower ' s agent .
Some agents are responsible for asking appropriate questions but then calling a lender with fragmented and incomplete information to discuss the potential loan transaction . The lender will respond that they need more information . The agent will answer , “ What do you need ?”
There are dozens of questions that may be asked at the front end , but getting to the basics of whether the potential loan transaction is viable is the beginning . Sifting through the maze of complexities includes : there is a prohibition of placing a junior lien without obtaining the first lien lender ’ s approval .
• This fact is important because , in many cases , the original borrower may have been parents , possible deceased members , siblings , cotrustees of a family trust , exspouses , or other miscellaneous parties . Some earlier property purchases were taken “ subject to ” a lien that prior owners application , processing , underwriting , and closing process ? A lender ’ s frustration will occur when the discovery that the borrower has intentionally excluded an undisclosed hostile party . I assure you that an unknown borrower party will not fool a good loan processor or the title company . When the title insurer underwrites their coverage , they will ensure that the correct parties have
• Property types , income generating , and occupancies ,
• Agent ’ s competency , property ownership variables ,
• Borrower creditworthiness ,
• Borrower ’ s propensity to withhold material facts ,
• Some borrowers will withhold information , unaware they will get caught while processing the loan . A critical thinking questioning sequence will avoid most of this .
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