Helping Someone Buy a Relative's Home
Intra-family Mortgage Loan Standards
Last Revised on February 1, 2021
In order to provide the greatest number of clients efficient, exceptional service, we target specific, common Family Mortgage transactions that allow us to offer a strong value. We sincerely believe that we’re the best at what we do, but sometimes, we’re simply not the right solution. We’re okay with this. Sometimes, complex real estate transactions require the expertise of a local attorney or other applicable service providers.
Please review our Standards below to help determine if your transaction falls within our service model.
Thank you for your time! If we’re the right fit, we look forward to helping you!
THE LOAN PURPOSE
To Seller Finance Residential Real Estate:
We facilitate Seller Finance Loans in all 50 states. All Seller Finance transactions are considered “Private Financing” and NFM documentation must be integrated into the Buyer’s / Borrower’s settlement with the local closing attorney, title company, or escrow company, that will otherwise conduct the Buyer’s / Borrower’s real estate settlement. We coordinate the delivery of the loan documents to the settlement agent. Please note, there is generally only one settlement agent, be it an attorney, title company, or an escrow company. The type of settlement agent is determined by state regulations and customs. Typically, the real estate agents involved with the transaction will help guide the selection of the Buyer’s / Borrower’s settlement agent.
THE LOAN PARTIES
We only facilitate loans between family members as defined below. We do not document transactions after-the-fact.
All Borrowers and Lenders must be US residents and have either a US Social Security Number or Tax ID Number. The Lender and at least one Borrower must share one of the following relationship dynamics, including adoptive and step relationships:
Grandparent <> Grandchild
Parent <> Child
Sibling <> Sibling
Aunt/Uncle <> Nephew/Niece
Spouse <> Spouse
If the Borrower’s subject property is located in the states of Maryland or Washington, subject to the Standards above, then we can only facilitate loans between:
Grandparent <> Grandchild
Parent <> Child
Sibling <> Sibling
If the Lender is legally married, then their spouse must also appear on the loan as Lender #2. Likewise, if the Borrower is legally married, then their spouse must also appear on the loan as Borrower #2 and on the deed / title of the subject property.
Additionally, due to various IRS tax reporting limitations and mortgage lending regulations of the Dodd Frank Act, to use our Loan Servicing platform, Lender #1 and Lender #2 must either be, (A) a legally married couple, or (B) file a joint federal/state tax return.
Loans may also be made from or to a Trust, (Family, Irrevocable/Revocable, Living, Realty), provided the Trustee of the Trust and at least one counter-party (Borrower/Lender) share one of the family relationship dynamics listed directly above.
We do not facilitate loans between Ex-Spouses, Cousins, Godchildren, Friends, Colleagues, or loans to or from family owned FPs, FLPs, LLCs, LPs, LLPs, PLLCs, S-Corps, Land Trusts, Life Estates, or Self-Directed IRAs.
The Lender may not co-own the subject property with the Borrower.
All Borrowers must personally sign all loan documents; Borrower signature via Power of Attorney is prohibited.
(Please note, to the surprise of many, the Lender does not actually sign the loan documents. The Lender is named throughout the loan documents as the lien holder of record.)
International notarization of loan documents is prohibited.
THE PROPERTY DETAILS
All intra-family loans will be secured by a residential single-family home, condominium, or townhouse located in the US.
The property may be the Borrower’s primary residence, secondary residence (vacation home), or an investment (rental) property.
All intra-family loans will be secured by a Promissory Note and the proper state and county specific real estate lien as either a primary lien, a secondary lien, or a tertiary lien:
Mortgage | Deed of Trust | Security Deed (One of these three lien types will be used, as required by state law.)
We do not facilitate loans secured by the following types of properties, especially when zoned as such by local authorities:
Agricultural / Farm Land
Commercial / Retail Property
Duplex / Multi-Family Property
Foreclosure Properties and/or Short-Sales
Forest, Mountain, Rural Property
Mobile Homes / Tiny Homes
Relocation Properties (Corporate Relocation Package)
We do not facilitate transactions documented under the following circumstances or agreements:
Contract for Deed
Lease to Purchase Agreements
THE LOAN TERMS
We currently offer two products with three available Loan structures:
The Win-Win Mortgage ® : Amortized (Fixed payment of Principal & Interest) or Amortized with Balloon
The Gift Mortgage ® : Interest-Only
All intra-family loans must meet or exceed the proper IRS Applicable Federal Rate at the time the loan is made.
All intra-family loan repayment terms and/or amortization period must be between 1 – 30 years.
All intra-family loan late payment fees charged to the Borrower shall be a minimum of 1.00% and a maximum of 4.00% of the Borrower’s standard monthly payment amount.
All intra-family loans include a payment grace period of 15 days.
All intra-family loans have no pre-payment penalty.
We do not backdate documents or document transactions after-the-fact.
We only facilitate Loan Servicing for transactions generated through our software platform. If you’ve already documented your intra-family loan some other way, and are only interested in the Loan Servicing, we can’t help you.
We do not facilitate escrow/impound accounts for the Borrower’s property taxes and homeowner’s insurance.
THE ONLINE APPLICATION
The Application should be submitted no more than three weeks before the Borrower’s / Lender’s projected real estate closing date / settlement date, and no less than two weeks before the Borrower’s / Lender’s projected real estate closing date / settlement date.
Either the Borrower or the Lender may submit our online Application and submit our one-time setup fee, with the following exceptions:
(1) If the Borrower’s subject property is in Kentucky, Maryland, Pennsylvania, or Virginia, then the Borrower must submit our online Application and submit our one-time setup fee.
(2) If the Lender lives in North Carolina, then the Borrower must submit our online Application and submit our one-time setup fee.
The setup fee must be paid by either the Lender or the Borrower, subject to the Standards above, and cannot be paid by some related third party (like another family member or an advisor.)
Each individual Lender and Borrower must have their own, unique email address.
THESE STANDARDS ARE NOT ALL INCLUSIVE AND YOUR UNIQUE OR UNUSUAL CIRCUMSTANCE MAY NOT BE SUPPORTED BY OUR PLATFORM. WE DON’T MAKE ANY EXCEPTIONS TO THESE STANDARDS. IF YOUR SPECIFIC, UNIQUE TRANSACTION IS NOT SUPPORTED BY OUR PLATFORM, PLEASE CONSULT A LOCAL ATTORNEY OR OTHER APPLICABLE SERVICE PROVIDER FOR HELP.
PLEASE DOWNLOAD THE APPROPRIATE FREE PRODUCT GUIDE, WHICH ALSO INCLUDES THESE STANDARDS ABOVE, AS WELL AS ADDITIONAL INFORMATION ABOUT APPLICABLE DOCUMENT RECORDING TAXES THAT APPLY IN THE FOLLOWING STATES:
Alabama, Florida, Hawaii, Georgia, Minnesota, New York, Oklahoma, Virginia, Tennessee.