Princ. Residence Loan to pay divorcee out

[Guest chris4013]

I have a interspousal deed to transfer the entire interest of the residence to the participant. The participant wants a 2nd personal residence loan, stating that the loan is for paying the divorced spouse out.

The first princ. residence loan was to purchase the same property.

Are there any issues with providing a 2nd loan, that's amortized for 15 years for the same property at the participants word that the money is used for the purchase of the transferred interest? The document does allow 2 loans, and 15 year amort. for principle residences.

[QDROphile]

The IRS has informally stated that purchasing a co-owner's interest is an acquistion of principle residence. But the money has to be used for purchsing the interest, not "paying out" the former spouse.