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How would you feel if the man you just married invited you to attend the closing of the purchase of your new home and at the signing ceremony he declares he is not married? That is exactly what happened at a recent signing in Mesa, Ariz. The escrow officer called the lender to correct the vesting once she learned the borrower had just married one week prior to the closing.

Tami Horne, an escrow officer for Lawyers Title in Mesa, Ariz., was in the process of closing a purchase transaction with a sale price of $331,500 and a new VA loan in the amount of $342,439. The loan documents arrived with the borrower listed as an unmarried man. The borrower showed up for his signing appointment with a new bride he had just married one week prior to the closing.

The escrow officer halted the signing to call the lender to see if the marital status on the deed of trust could be corrected to reflect the borrower as a married man. Tami told the funder over the phone she would correct the vesting, have it initialed by the borrower and ask the wife to sign a disclaimer deed disclaiming any community interest she might have in the subject property.

The funder instructed Tami not to change the deed of trust; instead she would have a new one drawn and send it over after she discussed this matter with the loan officer. Believe it or not the loan officer was at the signing appointment and stepped out to speak to the loan funder privately. He was overheard telling the funder he did not want to re–underwrite the loan because it was a VA loan and even if the wife did not hold title, her income and liabilities would have to be considered for that loan program.

Shortly thereafter the funder called back and said per the loan officer, the borrower was not married. Tami was curious, so she went to Facebook® and found dozens of pictures from the wedding posted less than a week ago. In fact, Tami recognized the maid of honor in the online photos; it was the borrower's real estate agent.

Tami went back to the signing room and told the borrower and loan officer she would not be able to close. The loan officer admonished the borrower saying, "I told you not to get married." He looked at Tami and said the borrower was not legally married, since the certificate of marriage had not been filed with the clerk of the court.

Tami stuck to her guns and would not allow the borrower to continue signing documents with his marital status reflected as an unmarried man. The loan officer became irate and said he would rip up the marriage license if that is what it would take to complete the closing. Tami was shocked, thinking if it was that easy to be "unmarried" divorce attorneys would go out of business!

The real estate agents were furious. They drew an amendment to the purchase contract changing title companies and moved the transaction. They had the buyer make a new earnest money deposit and closed the transaction after a few days.

Later, the agents bragged to Tami how the other title company did not care the borrower was married and told her to release her deposit back to the buyer, since the deal was now closed. Tami confirmed the closing had occurred at another company, so she released the deposit. She also discovered the loan had already been sold to a large loan servicer.

As a result of Tami's honesty, integrity and tenacity, she has been rewarded $1,000 by the Company and has received a letter of recognition. Going the extra mile to protect the lender and the Company from fraud is not easy and sometimes all–consuming. It had to be hard for her to refuse to close and upset her customers but her decision was easy with blatantly false information staring her in the face.

Had she closed this transaction and the borrower failed to repay the loan, the lender would have probably discovered the pre–closing marriage and added debt of the new wife and attempted to make a claim against the Company for allowing the closing to occur.

 

 
 

MORAL OF THE STORY

Arizona is one of nine community property states in the U.S. In community property states, married persons are considered to own their property, assets, income and debts jointly. If the borrower starts the loan process as an unmarried person and then during the process becomes married, their debt–to–income ratio is affected. The ratio could have a detrimental effect on the borrower's ability to repay the loan.

Tami knew the funder, loan officer and even the real estate agents were upset with her decision not to close, but she did the right thing. Had she closed and the borrower defaulted on the loan, the lender would probably look to our Company to attempt to recoup any losses they sustained from foreclosing and selling the property — which is a costly and time consuming process for a lender, especially on a VA loan.

 
 

 

 
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