Must joint tenant be also co-borrower?

[Karen]

I am giving my son 40% of the purchase price of the property that he wants to buy as long as my name is on the deed as joint tenant. His lender says that since I am to be listed on the deed as joint tenant, I am required to sign loan documents as well as co-borrower even though his credit rating is excellent, and he is borrowing only 60% which is about $70,000. Is it true that any joint tenant must be also co-borrower if there is to be a loan? This is in California.

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[Cris Vilela]

Karen:

Yes, the lender is correct. This is because, in case your son stops making
payments on the loan, the lender will have to sell the property to get the
lent money back. Since you will be on the deed, the bank will then need
your permission to sell the property which, of course, if you didn't sign
the mortgage documents, you would be under no obligation to do. The lender
is thus making sure that they have your permission to sell the property
under these circumstances before lending out their money. Hope this
clarifies,

CV

Post by Karen
I am giving my son 40% of the purchase price of the property that he wants
to buy as long as my name is on the deed as joint tenant. His lender says
that since I am to be listed on the deed as joint tenant, I am required to
sign loan documents as well as co-borrower even though his credit rating is
excellent, and he is borrowing only 60% which is about $70,000. Is it true
that any joint tenant must be also co-borrower if there is to be a loan?
This is in California.
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