My husband and I are purchasing a house. Because I am a stay-at-home mom, I can't be on the mortgage so my husband could get approved. We took money out of our joint account for a down payment and gave it to the seller .....now, a few days before the closing the bank required a gift letter from me to my husband for that money. It states in the letter that:"The funds given to the homebuyer were not made available to the donor from any person or entity with an interest in the sale of the property including the seller, real estate agent or broker, builder, loan officer, or any entity associated with them."
Why would the bank require such letter, since we are both on the account? Does the fact that it was a gift from me to my husband mean that in the event that we decide to sell the house in a divorce, I can't count on any money?
Often in qualifying for a mortgage, banks will require information regarding the source of funds for purchase. If, however, you have already closed on the home and the mortgage, you should be done---and the bank should not be able to require anything further of you (beyond payment of your monthly mortgage bill). I don't see why you should have to sign that letter, and cannot advise you to sign any statement that is not truthful.
With regard to the "character" of your home purchase, irrespective of the fact that the home has been purchased in your husband's name, it is and will still be considered "marital property" in the event that you and your husband divorce in the future. Marital property means that it is subject to equitable distribution in the event you divorce. Were your husband to try to claim any part of that house as separate property in the event of a future divorce, he would bear the burden of tracing the funds back to his separate property (which is something that he would not be able to do on the fact pattern that you have outlined).
Further, during a marriage, gifts between spouses are also considered "marital property." This means that the mere fact that you say that the down payment funds were a "gift" from you to time should not affect the character of the purchase. This, however, would be different if the "gift" were from a third party to your husband alone (and not to the two of you together). In the event of a third party gift, it would be possible for your husband to try and trace back to this gift to establish a separate property interest in the house.
Generally speaking, in a divorce, the court will consider the value of the marital property, the amount of equity in the property, and the type of appreciation. If, over several years of marriage, your husband continues to own that home, and $100k in equity builds in that home, that equity is presumed to be marital property. Even if he can successfully trace back $20k to a separate property gift, there would still be $80k in equity subject to equitable distribution in the context of a divorce action.
I am not an expert in mortgages but this does not pass the sniff test with me. I would definitely try to speak to the bank yourself and get involved in the process and even consult with a real estate attorney or an expert familiar with the mortgage process. Putting in writing that it is a gift to your husband, especially if not true, is not advisable (despite laws regarding gifts during the marriage.)
Banks have become very fussy ever since the mortgage crisis. I have seen them ask for proof that money taken out of an account and re-deposited later be authenticated. I also am not a fan of a "gift" letter between spouses in case in the future there is a problem in the marriage. While you may be able to prove that it was done for bank purposes, I would still prefer not having to address the issue if I were your attorney.
If my response has been "helpful" or the "best answer" please indicate it. It is rewarding to know that my answer has helped.
Is the bank insisting that the property be deeded solely in your husband's name?
The information provided is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered. The information is not guaranteed to be correct, complete, or current. I make no warranty, expressed or implied, about the accuracy or reliability of the information. You should not act or rely on any information at above without seeking the advice of an attorney. The determination of whether you need legal services and your choice of a lawyer are very important matters that should not be based on websites or advertisement
Being a stay-at-home mom should not preclude you from being on the mortgage or deed of your home. There is no requirement that an owner be employed. If on the other hand, you have bad credit, it is possible that the lender would not want you on the mortgage. Generally speaking, if you are not on the mortgage, you are not on the deed either.
The bank is requiring the letter since you are not an owner of the property and they want to be sure that you have no claim to the property. The letter seems a bit ridiculous since under New York State law, title does not control marital property. If the property was purchased with marital money and placed in your husband's name, it would still be marital property in the event of divorce. The problem in having it only in your husband's name is that you have no control regarding the sale or refinancing of the property.
You should consult with a lawyer.
Advice on this forum is for informational purposes only and should never be mistaken as a substitution for legal advice. Answering a question does not create an attorney client relationship. If you need legal advice, you should consult or retain legal counsel.
Our Rating is calculated using information the lawyer has included on their profile in addition to the information we collect from state bar associations and other organizations that license legal professionals. Attorneys who claim their profiles and provide Avvo with more information tend to have a higher rating than those who do not.What determines Avvo Rating?Experience & background
Years licensed, work experience, educationLegal community recognition
Peer endorsements, associations, awardsLegal thought leadership
Publications, speaking engagementsDiscipline