Hello, I am an attorney in South Florida, but unfortunatelly I am fairly young and am not experienced in this avenue of law. Basically, I have the following situation, and I need to know the best way to handle it.

A father and son purchased a home in south florida over three years ago. The father lives in Ohio and the son lives in Florida. When they purchased the home, the intent was to have both the father and the son on the mortgage for purposes of increasing the sons credit. The bank was aware of this intent to have both the father and the son on the mortgage, but it appears that through some form of oversight, the bank failed to have the son sign the mortgage note (the father did sign the mortgage note). However, the son does appear on all the other property documents such as the title, the deed, and the mortgage deed (not the mortgage note).

Recently, the father and son are going through tuff economic times and are attempting to modify their mortgage through the stimulus modification plan. However, in order to qualify, a party that appears on the mortgage note must be a primary resident of the mortgaged home. The father is a not a primary resident because he lives in Ohio. The son IS a primary resident, but he does not appear on the mortgage note because of the banks negligence in failing to acquire his signature on the mortgage note.

The bank is currently refusing to modify the note and is taking the position that because the son is not on the note, he was never intended to be on the note. Again, it was always the intent to have the son on the mortgage note and the son appears on ALL other property documents.

What can and should be done in this situation?

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Have your client find their original loan application, initial disclosures from the lender, and the final closing package they received when they took ownership of the property. You will be able to compare the original loan application and disclosures with the final closing paperwork to see if the loan officer changed their transaction from 2 borrowers to just the father. You will also be able to see whether the transaction was originated as an owner occupied or investment purchase.

Chances are that the decision was made along the way to drop the son because his credit score/debts/income, etc., may have either prevented them from obtaining financing or would have caused them to have a higher interest rate.

Was the loan officer who originated the transaction an employee of the bank that they're trying to get a modification from? if so, and the final docs show that it was originated as an owner occupied purchase transaction, then talk to the bank about their employee possibly committing fraud. Occupancy type is a very sensitive subject these days.

Who has been paying the mortgage to the bank, the property taxes to the county and the homeowners insurance? if it's the son, then gather up all the cancelled checks or bank statements showing the online trasactions and use that, in conjunction with the son being on title, to show that it is in fact "owner occupied".

Do you know who the investor is on their loan? they should ask the bank rep they're speaking with to find out. If it's Fannie Mae, Freddie Mac or FHA, then look up their guidelines regarding "kiddie condo's" and use that to your benefit when speaking with the bank. I know that FHA allows parents to purchase property for their children, without the requirement of living in the property. FHA only allows lending on owner occupied properties. You can find guidelines on their websites.

Be patient and persevere. Loan modification guidelines are constantly changing at the banks as time passes.

Good luck!