The Word ‘The’ in the Loan Papers

Lending Resources recently helped an IRA investor obtain non-recourse financing for the purchase of a bank owned single family residence. There were many delays in trying to close this transaction.  Some of those delays were the result of the bank dragging its feet on completing the paperwork or following through on the required approvals.  Other delays were due to the usual last minute details of obtaining insurance for example. However, when it came to signing the actual loan papers, some of the parties involved in this transaction thought that the title to the property was not written correctly.

Title to property bought with IRA funds is usually written in the name of the IRA custodian company for the benefit of (fbo) the IRA investor (their name).  In this case, the custodian’s name was titled with the word ‘The’ and then their full name - in this case Pensco Trust Co.  The IRA holder didn’t sign the papers when he received them, because he was told by one of his advisors that the title was incorrect due to the word ‘The’ in the title.  In addition, he thought his IRA’s designated number was supposed to be on the title which also caused him to question the validity of the paperwork.

Lending Resources sought to answer these questions once and for all. As it turned out the word ‘The’ was in the original corporate paperwork given to the lender’s legal department when the custodian originally filed its official name with that bank.  Therefore, the bank would only use the name of the custodian on the loan papers as it was originally submitted to them. Further, to protect the IRA investor’s right to privacy, the bank never puts the IRA designated number in the title of the loan papers.

As a result of these questions regarding the way the title was written in the loan papers, the signing of the loan documents was delayed. Fortunately, Pensco confirmed tha accuracy of the language in the paperwork and insured the papers were done correctly so there would be no repercussions any time in the future.  We obtained the borrower’s signature as well as Pensco’s, returned the documents to the title company and, ultimately, to the bank for the loan to be funded. It was a good lesson for all parties concerned and also helped to confirm that the lender had written the loan papers correctly.  The loan funded in time to satisfy the bank’s required timeline.