Mortgage loans between family members can be a win-win deal.
Proper documentation prevents tax problems and protects relationships.
How it Works
Real estate loans and financial gifts with relatives can be a win-win for both sides, but should always be documented. National Family Mortgage ® helps minimize the legal and federal tax consequences that can occur when family real estate loans and financial gifts are handled informally – or not documented at all.
You can use a National Family Mortgage ® in many of the same situations you might use a traditional bank mortgage, including:
- To help a family member purchase a home
- To sell a home to a family member
- A family funded Reverse Mortgage: Our Caregiver Mortgage ® is a secured line of credit, funded by the relatives, of a retired loved one. When the Borrower’s home is sold one day, or upon the settlement of their estate, the credit line is repaid.
We help Lenders make loans they feel good about, that prevent tax problems, transfer wealth, and protect family relationships. We help Borrowers fund their dreams and stay on track with payments. Our goal is to make family mortgage lending and borrowing safe, easy, secure, and successful.
Our products and services are available in the following US states:
Alabama, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois*, Indiana, Kentucky, Louisiana, Massachusetts, Maine, Maryland, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington, Wisconsin.
(This means the Borrower’s subject property is located in one of these states listed directly above.)
* If your clients wish to facilitate an intra-family mortgage loan secured by a property located in Cook County, Kane County, Peoria County, or Will County, we only support the Reverse Mortgage use-case. The local Estate attorney or Elder attorney who will otherwise conduct the Borrower’s loan closing must obtain a Private Lending Exemption Certificate (PLEC) from the state of Illinois Anti-Predatory Lending Department as required under state law in order to record the Mortgage.
If your clients wish to facilitate an intra-family mortgage loan secured by a home in a US state other than those listed directly above, unfortunately, we cannot help them.
National Family Mortgage ® is otherwise happy to work with you and your clients in whatever way makes you look great. Some financial advisors will guide their clients through our Family Mortgage process from A to Z. Other advisors may initiate a family conference call with one of our Family Mortgage Team Members. Most advisors simply refer their clients to our website for help.
Please be sure to review our company Standards found on Page 5 of each Family Mortgage Guide for complete restrictions and limitations.
Structure the Loan
How much money will be loaned? How much interest will be charged? How much can the Borrower afford to pay each month? Our collection of free Family Mortgage Guides include lots of information on how Lenders and Borrowers can work together to ensure their family loan is a complete success. We also have some great calculators on the Products / Pricing pages to help them get started.
Document the Loan
All National Family Mortgages ® have two crucial components:
Promissory Note: The Promissory Note establishes the legal debt between the parties and records how the debt is going to be repaid.
Mortgage / Deed of Trust / Security Deed: This is the legal security instrument through which the Borrower offers their property as collateral to the Lender in exchange for the loan.
Within one business day of submitting their online Setup Form, a Family Mortgage Team Member will call the client and Advisor to confirm the details of the loan. Within seven business days of submitting their online Setup Form, we will email the family their comprehensive loan documents for their review and approval.
Register the Loan
After the family has reviewed and approved their loan documents, the documents are emailed to the Borrower’s settlement agent. The settlement agent will oversee the execution and government recording of your Family Mortgage.
State laws in over half of the country legally require local settlement agent participation when closing a loan secured by real estate. As an ever increasing number of states move towards this legal standard, we follow this protocol with every National Family Mortgage ® transaction.
Additionally, the local settlement agent’s involvement will help minimize liabilities for all parties, and further ensure a successful arrangement for everyone.
Manage the Loan
For purchase money loans, our optional loan servicing program powered by FCI Lender Services, Inc., sets clear expectations, protects family relationships, and makes year-end tax reporting simple.
- Monthly payment reminders and statement
- Electronic payment processing and online account access
- IRS 1098 and INT-1099 tax reporting
- Toll-free customer support
Our award winning, patented, Caregiver Mortgage ® Manager does the same:
- Individual and group reports
- Annotate disbursements
- Upload and attach images and receipts
- Individual annual tax reports
- Federal Patent No. US D788,142 S