Intrafamily loans

Here's my understanding of the applicable rules:

If she were a U.S. citizen, the interest she collects would be fully taxable as income, and any discount below fair-market rates would, strictly speaking, be a gift from her to you.

No idea what effect her foreign-national status might have - e.g., whether you would be required to withhold taxes from the interest payments.

Can't see that you need a bank to intermediate, except perhaps as an escrow agent. There are legal forms available on-line, and mortgage math is pretty simple - Excel can calculate your monthly P&I for you. Clearly, if you're going to deduct the interest from your taxes (as you are entitled to do, even for private mortgage financing), it's helpful to have an official looking annual statement of the interest you paid. Would recommend having your attorney and accountant check everything at set-up, but paying a bank on an ongoing basis to "service" a private mortgage is going to be a big expense for very little benefit.

Check Virgin Money... they handle the forms for a fee. I don't know if it applies to non-US residents:

http://www.virginmoneyus.com/PersonalLoans/tabid/54/Default.aspx

Actually, even more relevant:

http://www.virginmoneyus.com/RealEstateLoans/FamilyMortgage/tabid/62/Default.aspx

Hey, West 81st and sashad, thanks a lot for the info!

Are you sure she would not want to give you the money and place her name on the apartment with you in joint tenancy? At her age, good estate planning and distribution? If she needed the income -- you could pay her the interest. Check out the tax deductibility for you on the interest with your acct. She will need to submit a 1099. By the way, no need for a bank. You could set up an automatic bill pay.