Q: I am underwriting a refinance loan held under an LLC. I found that the borrower doesn't own the property.
Title said they will file a QC at closing, I denied the loan. It just did not seem right. It should be a purchase loan, am I correct?
A: If you are in the business of underwriting loans, you should have an attorney who would answer questions like this. But yes, it appears that, if the present borrower is a LLC, and the LLC doesn't own the property it would appear that it cannot refinance a loan for which it is not obligated; it should be a purchase loan.
Jonathan A. Klurfeld agrees with this answer
A: I agree in all respects that if this is what you do as a business you should have a lawyer on standby for these types of issues. But yes, it would be a purchase loan as one cannot refinance something it doesn't own.
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