FNMA Request for Seller Financials

I will appreciate anyone's input to my situation.  We are currently working an IndyMac second-home short sale with FNMA as the decision maker.  Two partners are on the deed, but only one on the mortgage.

 

FNMA has requested the financials from both sellers, and the seller not on the mortgage is furious and refuses to produce his financials.

 

Anyone with experience in this situation?

Jim Pitts

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Permalink Reply by TG on August 28, 2011 at 8:47am
Agree with Kevin here... The bank CAN ask for whatever they want, and it's true that they have the power to accept or deny the short sale, but there is so reason they should be taking anyone's financials into account other than the person on the loan.  Think about other similar situations... if this person were to default on their loan the bank can't go after someone else just because they're on the deed.  If I apply for a loan, if I'm the only person applying and putting my credit rating on the line, I can't say "oh yeah but this person I'm living with makes $100k also.  they aren't on the loan, but just take that money into account and let me more please".  The bank shouldn't be looking at this any differently...
Permalink Reply by Dean E Eshelman, CPA, CDPE, IRES on August 29, 2011 at 3:54am
I can tell you as a CPA, that when both went on the deed they created a partnership in the eyes of the IRS, even if there is no partnership agreement. How was the investment property reported on tax returns - ie mortgage interest deduction. Was it split between the two. If rented or had rental or investment expenses, how were they reported on tax returns - ie were they split between the two. If so this is further indication of the existence of a partnership. Sorry, but both sellers have to produce financials.
Permalink Reply by TG on August 29, 2011 at 7:04am
The bank and the IRS are not the same... both partners are responsible to the government to pay taxes on any income that resulted in the transaction, but only the mortgagor is responsible to the bank on anything that has to do with that loan.  Sorry, but only the person on the loan SHOULD have to produce financials.  The bank CAN ask for whatever they want thoug...they can ask the seller's best friend to produce financials if they want to and deny the short sale if it doesn't happen.  So yeah, they can do this..it's just ridiculous, that's all.
Permalink Reply by Mark on August 29, 2011 at 8:57am

They wouldn't have a foreclosure on their credit report if they weren't on the mortgage - which is the subject of the thread.  

Being added to the deed doesn't obligate you to pay the mortgage, nor does it allow a lender to smear your credit.   

Brian Avery said:

I have had several clients refuse to supply their financials. They all have one thing in common. A Forclosure on their credit report once the trustee sale took place.
Permalink Reply by Chuck Wartman on August 30, 2011 at 8:23am
One way around it if the person continues to be a pain. Have them send it in directly to the bank. Maybe that will help them feel better about it not going through so many hands.

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