FHA Loan/ID Theft

[ruthc]

This isn't really a tax question but the cause of this question is due to a refund that is being held up by the IRS due to ID theft. Client is in the process of buying a house (FHA loan). They were going to use their $7000 refund for part of the down payment. Due to the refund being held up, a relative agreed to lend the money to them until the refund comes in. Now the loan place wants the relative to sign a form saying the money is not a loan, but a gift, and will not ask for the money back.
Has anyone ever had to sign a form like this? Do they ever check to make sure it is never paid back to the relative?
Thanks for any response!!

[WhiteOleander]

I would tread very carefully here. Signing forms that are false in relation to mortgages is a federal crime. I have seen some people procecuted for it.

[Burke]

.
Has anyone ever had to sign a form like this? Do they ever check to make sure it is never paid back to the relative?
Thanks for any response!!

In the case of default on the FHA loan, they would surely check. But if the relatives loan him the $$$, surely the TP would pay them back with the tax refund. Perhaps if they signed a document to the effect that the loan repayment would only be required if and when the refund check is received?

[mactoolsix]

This isn't really a tax question but the cause of this question is due to a refund that is being held up by the IRS due to ID theft. Client is in the process of buying a house (FHA loan). They were going to use their $7000 refund for part of the down payment. Due to the refund being held up, a relative agreed to lend the money to them until the refund comes in. Now the loan place wants the relative to sign a form saying the money is not a loan, but a gift, and will not ask for the money back.
Has anyone ever had to sign a form like this? Do they ever check to make sure it is never paid back to the relative?
Thanks for any response!!

Yes - recently "loaned" my daughter some money to help her avoid PMI (getting below the 80% equity). The loan company does not view "loaned" money the as being the borrower's funds, thus they require that you sign a "gift letter." Since the amount is well below the gift tax exclusion, and in the end we recorded a note tied to the property, I didn't see any problem with it.

Mike