FHA Loans / FHA, VA & Conventional Related

When going FHA, do Co-Signors take title to the home?

May 18, 2011 at 6:00 pm By

A client called today, anxious since he had read online that cosignors don’t take title to the home they are helping the Buyer/borrower purchase.
Technically this is accurate, but not the entire story.
Over the years FHA has made a distinction between non occupant CO-BORROWERS and non-occupant COSIGNORS.

In fact my research shows that the only FHA programs that allow Non occupant CO-SIGNORS that are not considered CO-BORROWERS are refinance programs. And in my 15 yrs of doing this, I don’t remember the last time I saw a file with a Co-Signor as opposed to a Co-Borrower.
Here’s how it works:

NON OCCUPANT- CO-BORROWERS
• Must take title to the property (ie when Seller signs Grant deed, your parents names’ will need to be on there)
• Must sign the Promissory Note
• Must sign the security interest which in CA is known as the Deed of Trust and many other States known as the ‘Mortgage’ (see page 79 and 80 of the FHA 4155 handbook_

NON OCCUPANT COSIGNORS
• Do not need to take title to the home
• Must sign the promissory Note
• Do not need to sign the security interest which in CA is known as the Deed of Trust.

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