Legal Question in Real Estate Law in Illinois

''No Mortgage for You...You built it yourself!''

Hello,

My husband and I built our home. We used a personal interest only loan of $105,000, borrowed money from my mother in law $75,000 and used approx $100,000 of our own money. Totaling $275,000. We are trying to mortgage only $200,000. The house appraises for $350,000.

The problem: My husband built the house with friends. We did not hire contractors. We bought and installed everything ourselves. Because of these facts, we did not have lien waivers signed. We completed the house at our own pace. It has taken us from 11/06 to 01/09 to complete the house.

We went to our ''closing'' yesterday. The title company said, ''Oh, this is new construction! You cannot get a mortgage without lien waivers! You have an uninsurable mortgage! How do we know that you really paid everyone off? How do we know there will not be any liens placed on the house in the future?''

My question is...they have had the paper work...why is this an issue NOW? They sent the closing papers into the lender/mortgage company ''subject to''...we were denied the mortgage. We have been pre-approved for this mortgage for SEVERAL months.

Is it true that we will NEVER be able to get a mortgage? Do we have ANY options?


Asked on 1/16/09, 12:04 am

4 Answers from Attorneys
Thomas Moens Moens Law Offices, Chartered

Re: ''No Mortgage for You...You built it yourself!''

Just get lien waivers and receipts and you should be fine. Google "lien waiver forms," go to an office supply store, or ask the title company for the forms. They are very common. Have everyone who worked on the house or supplied materials sign one. They are very simple forms, and they do not need to be recorded. The title company will also probably want you to complete a contractor's affidavit, which is essentially just a list of everyone who worked on the project or supplied materials. They should also give you this form. Easy peasy. Let me know if you have any questions.

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Answered on 1/16/09, 9:18 am
Lesley Hoenig Lesley A. Hoenig, Attorney at Law

Re: ''No Mortgage for You...You built it yourself!''

You might find it helpful to have a real estate attorney help you with this. It should be possible to address any possible liens against the property in order to get the loan to close if that's the reason you were denied the loan.

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Answered on 1/17/09, 9:55 pm
Burton Padove Indiana and Illinois Lawyer, Burton A. Padove

Re: ''No Mortgage for You...You built it yourself!''

If you have not done so already, get your freinds etc. to sign lien waivers. I agree with Tom, nothing complicated here. LaGuru might even have the forms. The title company will have the contractors affidavit

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Answered on 1/31/09, 12:18 am
Zedrick Braden III Ainsworth & Associates PC

Re: ''No Mortgage for You...You built it yourself!''

Hello. According to economic reports, it is now more difficult to get credit, including mortgages. I do not believe that you would be having this problem, but for the state of the world economy. What I suggests is that you consider recording lien waivers and get lien waivers from anyone who assisted you in the construction of your home. This is very tricky. You should have a lawyer representing you. Recording the lien waivers may not be the total answer to your problem, but I suggests that you consider doing this for starters. Will be happy to discuss this further and in more detail.

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Answered on 1/16/09, 3:14 am


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