Wifes friend wants to borrow some coin
 

Excuse my punctuation as Im using the phone...

A friend of my wife and former co-worker wants $1200 "gifted" to her (has the state form) in order to buy a house. She mentioned in her request, which is in the form of a typed letter, that she would pay us back.

I'd have to re-check the details, but iirc she didn't qualify for a loan becuase of overtime (she's a nurse).

They are good friends but it seems like an odd request.

For some reasom my scam detector is going off. I can provide more details when I go home and re-read the letter.

If you move forward with it, get a legally binding contract before anything else.

Here is the question I have. If it is "gifted", doesn't that mean no repayment is expected? If you present a demand for payment, did you lie on your original form? I think this is a little too much to ask. You are not asking me to spot you $10. So, you basically are going to have to be willing to write off $1200.

She says she will repay you. How do you know she will do what she says? You want a contract? To be upheld by what court?

http://articles.directorym.com/Finding_a_Down_Payment_to_Buy_a_House_Minnesota-r935206-Minnesota.html

Using a Gift to Help With the Down Payment

Family, especially parents and grandparents, will often help with home purchases. As a practical matter, the gift must come from a close family member -- the lender involved in the rest of the deal won't trust that gifts from distant family members or friends are not secret loans.
Borrowing Down Payment Money From a Relative or Friend

Another way to raise money for a down payment is to borrow it from friends and family -- many people prefer to ask their loved ones for a loan rather than a gift. Of course, you must repay the money, and your bank or institutional lender will factor this addition to your debt burden into its own decision on whether to loan you money.


I know what you're thinking. "Will she return the money without issue or not?" Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is a $1200 issue, a very big dollar sum, and would blow your wallet and/or checkbook clean open, you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?

This woman is a hard luck case. Rough background, put herself through nursing school etc. Afaik she's honest, but she knows that we are good for the money too. She stayed at our house 2 yrs ago and at our family retreat in Naples, FL.

Wait a minute, you have a family retreat? My God man, buy the house for her.

She didnt qualify for a loan because she works too much? Seems odd. Anyway, I just basically gifted my sister $1370.00. I do expect her to pay me back, but who knows when that will happen. The thing that sucks about lending money is it never comes back they way it left.

Read my "edit" and see what you think.

Shakespeare once said:

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

You have bigger stones than I do. I never buy, sell or trade with family.

Borrowing Down Payment Money From a Relative or Friend

Another way to raise money for a down payment is to borrow it from friends and family -- many people prefer to ask their loved ones for a loan rather than a gift. Of course, you must repay the money, and your bank or institutional lender will factor this addition to your debt burden into its own decision on whether to loan you money.

If she has a official loan and not a gift, the bank figures that into the equation. IOW, if you have 5 loans and you default, will I get paid when they sue you?

If you can't afford to just give the money, don't do it.

:D:D:D:D:D
Thanks Clint, er Aklim.

Your valid points I agree with.

1. Be prepared to lose the 1200.
2. Be prepared to lose a good friend of your wife.
3. Forget her veracity with the application. Get a note signed. It may not be worth the paper it's written on as far as collectability, but you can get a judgement against her in court if she renegs. May be of some value.
4. See point 1.

LOL. No kidding.

Though, people should not just ask for hand outs.

It does sound suspicious....no loan because of overtime? That makes no sense.

There's something fishy with her request....

Been there, done that, never saw the money.

Is she's hot looking?:D This thread is worthless without pics of borrower!

If the bank does not think she can repay a $1200 loan, why would you loan it to her? Also if she does not have $1200, she should not be buying a house. When I do buy a house, I will have a sizable down payment that is not borrowed and a good cash reserve.

Didn't know you went over to the other side :rolleyes:

1&2: I think Shakespeare has warned us that it was a distinct possibility.

3: But in court, aren't you going to have to say that you lied when you said you gifted her the money when it was actually a loan? You sure you want to do that? Aren't you going to be like the Einstein that reported to the cops that someone stole his pot? The only reason they didn't charge him was that there was no pot around and no evidence other than his words.

I think we're missing some of the story.
Perhaps the lender doesn't view the overtime as secure enough a source of income to meet its criteria. Or without the overtime, she fails to qualify.

She seemse to be a marginal loan candidate at best.
Try another lender. FHA or something.

Where's Med Mech when we need him????

I know that Medicare does not allow you to have too much assets. Maybe this is a low income loan where if you make too much you do not qualify since you are no longer "low income"?

Aklim, six posts out of 19? Slow down, dude, save it for the next one.

http://usgovinfo.about.com/cs/grantscontracting/a/housingloans.htm

ELIGIBILITY REQUIREMENTS
Applicants must have very low-, low- or moderate incomes. Very low-income is defined as below 50 percent of the area median income (AMI), low-income is between 50 and 80 percent of AMI; moderate income is below 115 percent of AMI. Families must be without adequate housing, but able to afford the housing payments, including principal, interest, taxes, and insurance (PITI). Qualifying repayment ratios are 29 percent for PITI to 41 percent for total debt. In addition, applicants must be unable to obtain credit elsewhere, yet have an acceptable credit history.

I assume that Swede wouldn't have to make any signed declaration about gift or loan to the lender. If the bank requires a signed declaration from the "lender" friend or relative my view naturally chnges. But if that's the case. how would the bank know where I got the money from if I decided to deceive them and tell them it was personal savings?

The bank's in the first position anyway. 1,200 would be a teensy weensy fib on the friend's part. If the lender is requiring 10 or 20% down, it's not likely to end up being litigated.

Make sure she has explored all her options. If she has a 401 and it is her first home purchase she can take out up to $15k with no penalty.

I think he could have (or maybe should have) ended with #7.

That one pretty much covers it.

let me add my opinion (already stated)
only lend it if you never expect to see the money again. If she needs $1.2k to buy a house (paying realtor's fees ?) then she isnt in a good spot already, however, its difficult to argue that house prices are going to go down in the forseeable future...

And keep your family's retreat - you don't get retreats without being smart with money in the first place =)

-John

:blush: :dunce:

Nope!

Like I said, I think we're missing some of the story....whether she's trying for a conventional mortgage for traditional housing or is attempting to get into a subsidized setting. That would turn the issue of overtime 180 degrees.
But if the overtime was pushing her out of consideration for a subsidized loan, why the need for the 1200 anyway?:confused:

I have to re-read the particulars, but what you just mentioned is pretty much the crux of it.

Couldn't have said it better myself.

If she doesn't have $1200 left in her account after buying a house, she shouldn't be buying the house. How is she going to pay to have the cable hooked up? Etc...etc. Owning a house costs money and if she is broke when she moves in then it is a bad idea.


If you feel like giving her $1200 then go ahead. But if you feel like 'loaning' her $1200 then I would politely tell her what I just stated above and then say no thanks.

loans are reallu tough to push through the banks right now. most likely the 1200 is because they want her to pay more points. they will not base her ability to borrow on overtime, most banks never count overtime as it is not a part of the base salary and as such will inevitably disappear leaving the debt ratio too high. also they do look to see if you have some savings left, you should ask this question too as someone posted previously.

to me the most telling part of the story is that this person has worked very hard to better herself and that will bode well in her effort to repay. those type of people are determined to pay their way in life. My guess is it will not be payed in a short time, but will eventually get paid. If its a close friend, and you have the money to give, 1200 doesnt seem like a lot to boost them up in life, and to give your own mental wellbeing a nice boost. if it is just an aquaintance, then it is a lot to ask. either way be prepared to give it to them, and hope that it will be repaid in some timely manner, and expect it to take a long time.

I can live without that money. I know she will pay me back. I lent her money years ago, but never kept track of a total. I cant remember how much, but it was less than a grand. We worked out a deal and she gave me her laptop and I forgave the loans. This time around I wrote a check and can keep track of it. I am happy to do it for her, but I have two other sisters that I would never lend more than I could afford to lose because they are not good for it. They are still young, and I hope they will see that they need to pay their debts. I will not lend money to a friend. I have a broke friend who is worthless when it comes to money. I have another friend who has good intentions, but small income and lots of outgo. When he needs money he usually has to work on my car so he wont have to pay it back and I dont have to do it.

So what does the girl look like? Would it be worthwhile to "take it out in trade" if she cannot pay?

I already asked he said nope:mad: Sooo no deposit on incum!:D

First you asked how "he" looks. Can't be sure about you. Freudian slip? :D

My uncle just delt with a similer situation trying to close one of his spec houses. The bank pulled a real SOB move the day before the closing and told the people to come up with another $10k. They couldn't get a loan since that would impact their credit, it had to either come from themselves or a gift. Either way the bank wanted evidence of where it came from; so my uncle couldn't just write them a check or something.

I suggested that he buy something from them for $10k, like an old car or TV.:D

The attorney's eventualy worked it out, and my uncle just had to reduce the price $3k.

These days the banks are real SOB's about closing houses. While here story sounds suspect, I wouldn't be surprised if they wanted another $1,200 from her for a BS reason. Giving her them money would be a risk on your part, because if she doesn't pay you back since it was a "gift" you can't really do much.

I have a family compound in Hyannisport . . . .

Good, my wife wisely decided against it.

That would be worth the $1200 at $50 a time.

Swede- RRUUUNNNNNNNNNNN. Friends and "loans" don't mix. If you want to GIVE her the money fine but don't expect it back.
LNK
Dear Abbey

The friend called yesterday and wifey told her that she was still thinking about it. She wanted to say no, but hadn't yet formulated her answer.

It will be interesting to see how this friend reacts when she get rj'd - a test of true friendship.

if she'll give you something as security that is worth as much as a loan or a bit more, I'd say go ahead....

That is entirely possible. There are lots of low income, first time buyer FHA type stuff where qualifying incomes are capped. In artist live/work buildings, they are almost always capped, which I found amusing. Once you sell enough art, you get kicked out.









I'm with the others that have said don't loan anything you expect to get back. If you're fine with never seeing the money again, go ahead. That way you only get pleasantly surprised.
As for how to reject, my suggestion would be to say that you don't want to introduce the possibility of akwardness into the friendship.

Why don't you test yourself? Loan her the money.

Friend of mine still owes me $1000 from when his restaurant failed. He's still my friend. I still owe a friend $273 in bail money. He's still my friend too.

I barely know the woman. If one of my buddies ask for a loan, I'd help out. I'd prefer a phone call rather than a letter that resembles some sort of phishing scam.

In my experience a stranger will pay you back before family and so called friends. :(

This thread is starting to make me........


Feel Like A Stranger (Grateful Dead)

Lyrics: John Barlow
Music: Bob Weir

Inside you're burning
I can see clear through
Your eyes tell more than you mean them to

Lit up and flashing
Like the reds and blues
Out there on the neon avenue

But I feel like a stranger
Feel like a stranger

Well the music's thundering
We're restless and hot
You keep firing glances across the room

And I can't stop wondering
Just what you got
Get the feeling I'm gonna find out real soon

Still I feel like a stranger
Feel like a stranger
Well you know it's gonna get stranger
So let's get on with the show

Yes and the wheel
Gets smoking round midnight
You shoot me a look that said let's go

Yes and it feels
Just like running a red light
There ain't no point in looking behind us, no

But I feel like a stranger
Feel like a stranger
You know it keeps getting stranger and stranger
If it's love then how would I know?

Yes and it's gonna get stranger
Some things you just know

If this were love then how would I know
(Feel like a stranger)
(Feel like a stranger)
Feel like a stranger
(Feel like a stranger)
It's gonna be a long hot crazy night
It's gonna be a long long crazy crazy night
Yeah crazy night
Silky silky, crazy crazy night

I have loaned money to friends and family and somehow they feel like I don't need the money and don't pay me back. As for strangers, several years ago a stranger walked into my shop and said that his car had a bad battery and could I loan him the money to get a new one. He was from out of town. I took a chance and loaned him the money for a battery. About a week later I got a check in the mail from him with a note that said thank you. BTW the check was for $20 more than I lent him. :D:D:D