Mortgage Application

[lenn]

Hi

 

I hope this is the right forum for this.

 

I am the sole executor for my late mothers will.

 

The benefactors are me and my brother who resides in the property.

 

There is one small debtor.

 

The will is clear. The estate is to be divided 50/50 after debts etc.

 

My brother has a poor credit history.

 

My brother has applied for a mortgage to buy my half of the estate. We have agreed on a sum.

 

One lender refused his application because of his poor credit.

 

Another lender would only lend him the money if the title deeds were in my (the executor's) sole name.

 

The third lender would only lend him the money of the title deeds were in his sole name.

 

I am reluctant to transfer the title deeds either way as I see it as an administrative exercise and an unnecessary expense and neither of us are protected.

 

Has anyone any experience in this type of problem before?

 

Thanks

 

Regards

 

Lenn

[BankFodder]

You could investigate buying the property for him in your name and holding it for him on trust subject to written guarantees that he will pay the mortgage and maintain the property etc.

 

Have all of this set out in a formal trust document. Do not rely on a handshake - or brotherly love

[Guest]

why wld you be reluctant if you have agreed to sell your half of the house. the house wld then be his so wldnt he need the title eventually? it wld all need to be done officially.

but, do you mean before probate? it prob cldnt be done properly before probate anyway? sell yr half to him after probate, with legal advice?

[marmaris30]

If I understand you correctly, you and your brother currently have an equal share in the house, as a result of your mother's will. With probate, you as executor have legal control over the land registration but you would normally be required to convey the property to you and your brother's jointly. This step can be skipped because probate allows you as executor to transfer the property, and beneficiaries are allowed to make private agreements about distribution.

 

He wants to buy your half but is having difficulty obtaining a mortgage to do so.

 

The lender asking for the land registration to be in your name has misunderstood the fact that their lending will be secured against something of which your brother already owns 50%. Do not use that lender because in that situation, you will be holding the property in trust but with no control over it.

 

If he is buying your 50% to obtain sole ownership then it would in fact be odd for the registration to be in anything other than his own name.

 

The third lender in your list is therefore correct to demand this, and it is necessary administration. As far as protection is concerned, there will be a completion date for the transfer, when the mortage lender will transfer the cash to you for 50% of the property's value. Your brother will then own 100% and is responsible for repaying the loan secured against his ownership. You will no longer have any interest or control in the property and you won't need it either.

[lenn]

Thank you for your replies.

 

To confirm I have probate.

 

The lender third on my list is insisting the property is in his sole name before they will consider any lending.

 

I understand absolutley the title deeds will be in his name upon completion.

 

As executor with probate I am authorised to sell the property currently in my mothers sole name. I cannot grasp why I should transfer it to me or him before any sale takes place. Of course upon completion I would expect this.

 

Thank you for your time.

 

Lenn

[lenn]

why wld you be reluctant if you have agreed to sell your half of the house. the house wld then be his so wldnt he need the title? it wld all need to be done officially.

but, do you mean before probate? it prob cldnt be done properly before probate anyway? sell yr half to him after probate, with legal advice?

 

I am reluctant because I would be transferring the title deeds to him without receiving payment representing my 50%

[lenn]

You could investigate buying the property for him in your name and holding it for him on trust subject to written guarantees that he will pay the mortgage and maintain the property etc.

 

Have all of this set out in a formal trust document. Do not rely on a handshake - or brotherly love

 

This is not an option.

 

Thank you for your reply

 

Lenn

[Guest]

I am reluctant because I would be transferring the title deeds to him without receiving payment representing my 50%

 

as i said, and marmaris posted, if not before probate, sell after probate. to be sure, to be sure

[lenn]

as i said, and marmaris, if not before probate, sell after probate or will satisfied. to be sure, to be sure

 

I have Probate.

 

Lender will not process loan because property is not in his name.

 

It is in our late mothers name.

 

I am the executor.

 

Lenn

[Guest]

I have Probate.

 

Lender will not process loan because property is not in his name.

 

It is in our late mothers name.

 

I am the executor.

 

Lenn

 

seems as per marmaris then.

[marmaris30]

Thanks for getting back with the additional points.

 

It seems very odd for the lender to expect the property to be in his name *before* the 'sale' takes place, and that's effectively what it is. I hope you are able to find some more understanding lenders, although remember that multiple credit applications over a short period won't look good on a credit file, whoever it may be, so it might be advisable to check whether they are carrying out a search on 'enquiry'.

 

Perhaps you should enquire of a solicitor as to whether the trust option is possible. They usually offer the first hour for free and then at least you'll know whwre you stand.

[lenn]

Thank you Marmaris30.

 

It is the oddness that has set the alarms bells ringing and bought me here.

 

I was hoping to confirm that this is odd and not some major change to house purchase that I have missed. I can find no other scenario like this via google.

 

I think I will investigate how my brother is articulating his requirements.

 

Thank you again for letting me bounce off you.

 

Lenn

 

[marmaris30]

No problem, that's what we're here for. At worst, you'll probably have to convey twice, first to you and your brother jointly, then to your brother as a second and separate transaction. I hope it works out for you both.

[Guest]

lenn

 

seems maybe the best way to be sure in yr circs.

ps, but any tax advantages either way?

[Ethel Street]

No problem, that's what we're here for. At worst, you'll probably have to convey twice, first to you and your brother jointly, then to your brother as a second and separate transaction. I hope it works out for you both.

 

That thought occurred to me too as I read the thread. A bit of an administrative pain (and cost) but that might be the way forward as far as the registration of title is concerned.

 

I'm still not sure whether this would help at all with the problem of your brother and his credit history. Unless your mother's Estate has significant assets other then the house your brother is still going to need a mortgage loan to buy out your 50%. You acting as guarantor for his mortgage might be another option but you may rule that out for other reasons.

[Guest]

lenn do you need to sell the house in probate prior to settle the estates debts/fees etc?

[lenn]

This has now moved on a little. My brother has been refused a mortgage because, the property has not been registered in the name of a living person for at least 6 months.

 

Has anyone else come across this?