What are the guidelines for co-borrowers and co-signers?

To be eligible, all occupying and non-occupying borrowers and co-borrowers must take title to the property in their own name or a living trust at settlement, be obligated on the Note or credit instrument, and sign all security instruments.

In community property states, the borrower’s spouse is not required to be a borrower. However, the mortgage must be executed by all parties necessary to make the lien valid and enforceable under State Law.

Cosigners are liable for the debt and therefore, must sign the Note. Cosigners do not hold an ownership interest in the subject property and therefore, do not sign the security instrument.

Non-occupying co-borrowers or cosigners must either be United States (U.S.) citizens or have a principal residence in the U.S.

A party who has a financial interest in the mortgage transaction, such as the seller, builder or real estate agent, may not be a co-borrower or a cosigner. Exceptions may be granted when the party with the financial interest is a family member.

For additional information see Handbook 4000.1 II.A.1.b.ii.(A) available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh