Home Equity Loan Info needed

[jlf58]

I am well versed in mortages etc. I am trying to get some info for my sister and figured a TUGer would know the quickest solution. She has a house she owns free and clear, worth about $250,000. She is mid 50s so doesn't qualify for a reverser mortgage. Her income is VERY low, 20kish, but has about a 725 credit rating and also gets alimony. This equity loan will get her by fopr a few years until her financal situation changes. She got turned down for a traditional equity loan due to income. What banks due no income verification equity loans ? It amazes me they won't lend her money with all that equity and a good credit score. TIA . any other options ? I know we have bankers on TUG who will know where to point me

 

[K&PFitz]

You've probably seen the end of the "no income verification" loans. The Dodd-Frank Reform Act requires the Consumer Financial Protection Bureau to issue rules implementing the "Ability to Pay" section of Dodd-Frank. The Fed issued a proposed rule about a year ago, and now that the CFPB is up and running, we're waiting for the final rule in the next couple months.

In essence, a borrower will be able to sue a bank if the bank does not verify that the customer can afford the loan. Also, if a bank files foreclosure, but did not verify the abilty to pay, the customer can assert that fact as a defense. Banks that have not tightened up already soon will.

In addition, proposed Regulation RR, the Risk Retention rules, will give lenders a financial incentive to impose what some now see as "old-fashioned" underwriting rules: 20% down, 28% mortgage payment to income ratio, 36% total debt to income ratio.

Make sure the bank considered her alimony as part of her income. They cannot exclude that if it's paid regularly.