Long story short: My husband's parents lost a shit load of money in the housing crash because they put all their eggs in one basket with buying too much house and then lost their jobs. They declared bankruptcy and just now have credit scores decent enough to qualify for a FHA loan. 4 years ago when I met him, he was buying his parents groceries and cat food. They took out a credit card in his name that they missed payments on, that still affects his credit today.
So their deal is that they are buying a new-construction house, and have put down their 1% in earnest money. They only need 3.5% down-payment for a house that will still be too big for their needs, but they put every last penny they had into the earnest money. They were counting on grandma to gift them the $5,000 they needed, but she's 89, her executor won't allow it. What MIL wants to do is get an interest-free loan from a faith-based organization and put that money into grandma's account and then have grandma sign it as a gift to them. MIL wants my husband and BIL to sign on this little loan. It's not credit based, won't show up on anyone's credit report, but we will still be liable if they default on the little loan. She's banking on bonuses FIL gets as a part of his compensation plan to make sure they can pay it back.
My husband calls me that his mom wants to do this, so I called her for more details because I am the financially literate one, as we say I wear "the pants with suspenders" in the relationship. I ask MIL all the questions he doesn't know to ask and find all this shit out. She didn't tell him about passing the loan off as grandma's money and not letting the mortgage loan people know about it. We are decidedly not signing this. She has my BIL roped in this, we want to call him to make sure he knows the facts of the situation without swaying his views one way or another.
We have been married for less than a year. I love his parents very much, I want to see them be successful, but they are not learning from their past mistakes. They hold a Parent Plus loan for my husband's education that we want to start helping out with. I know they won't have savings and will continue to ask for money when they inevitably need an electrician, something goes out, etc. She told me she might get one of her sisters to co-sign if we won't (which we aren't). They are banking on future paychecks to pay for moving costs, appliances, stuff like that.
This is a form of soft fraud, right? I don't want to be the new bitch in the family that ruins their dreams of homeownership. Lying on the application by omitting this little loan means they're not qualified for their loan, right? I just want to protect my family from their mistakes.
