Old 08-25-2009, 05:04 PM   #1 (permalink)
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Question about loan classification

So i'm pretty well versed in 580b and the protections provided, I went through the loan documents today and found this...

Background: Property was purchased with a 1st and a 2nd loan (80/20), no cash out no refi, original purchase money for a primary residence/owner occupied.

Loan 1 (80) had the following boxes checked:
[x] Purchase [ ] Construction....
[x] Primary [ ] Secondary [ ] Investment

Loan 2 (20) had the following boxes checked
[x] Purchase [ ] Construction...
[ ] Primary [x] Secondary [ ] Investment

Is it standard practice to classify a 2nd TD used to purchase a primary residence as "secondary" in this case? It seems a bit odd to me since both loans are for the same property/same borrower and the 1st TD's loan docs have primary checked but the 2nd TD does not.

I'm concerned because I know 580b covers primary/owner occupied properties and purchase money, I feel as though this checked box could give the impression to the 2nd TD holder that this was a 2nd property and therefore recourse.

Any insight by attorneys, mortgage bankers, etc... would be greatly appreciated. Thanks a million!


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580b, non-recourse, purchase money mortgage, recourse

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