When completing the contract it is important that the buyer’s name matches exactly how the client intends to apply for the loan and how he wants to hold title. For example, if Jonathan David Smith is your client/buyer you need to inquire as to how he would like to hold title. If he says as “J. David Smith” make sure that Paragraph 7 of the CCRA contract and the loan application are exactly the same; “J. David Smith”.
If his loan application is completed as Jonathan Smith and the contract is in the name David Smith this can potentially cause closing delays because the name on the deed must match the mortgage document. Changing the documents at closing sometimes can be very difficult. If your client is purchasing an REO or RELO property the deeds are often signed well in advance of closing. Getting a new deed executed can sometimes be an impossibility. Additionally, many REO sellers will not allow a name variation after the contract is signed.
Also, lenders require the closing attorney to check the county records and report any liens or judgments against the buyer. If a different name variation is searched based on the contract and at closing a different name is used on the loan, this will create larger issues closer to, or even after the closing.
This issue can easily be avoided if you ask your client in advance how they intend to hold title and remind them to complete the loan application using the same name.
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