Because you don't own the house

[bankworking]

A home equity loan is a loan secured by the equity un-claimed by any first mortgage you might have on a house that you already own and reside in.

We occasionally get those people who try to get a home equity loan on a house they own but do not reside in. We occasionally get those people who try to get a home equity loan on a house they are purchasing. I've got the explanations down pat for explaining that they will have to get a 1st mortgage product, as a home equity loan cannot work in these circumstances. But at least these are cases where a loan is possible on the property, just not the type of home loan that I do.

This guy... wants to do a home equity loan on his girlfriend's house. Her name is the only name on the deed. He lives there, so feels that he should be able to get a loan using her house "without bothering her about it".

Um.... no.

Actually, let me re-phrase that: NO!


Seriously?

[MoonCat]

Does he not realize what would happen if he defaulted on that loan? Or perhaps not care?

[Argabarga]

I'm voting not care, afterall, it isn't his house.

[Deserted]

I'm thinking, he knows the relationship isn't going to last, and he's looking to get something out of it.

[Seanette]

This guy... wants to do a home equity loan on his girlfriend's house. Her name is the only name on the deed. He lives there, so feels that he should be able to get a loan using her house "without bothering her about it".

Um.... no.

Actually, let me re-phrase that: NO!

Seriously?

I really hope you have some loophole in privacy regulations that would allow you to let the actual owner of the house know what's going on. I strongly suspect that this bozo will keep trying until he gets a sufficiently unscrupulous lender.

[Aria]

I really hope you have some loophole in privacy regulations that would allow you to let the actual owner of the house know what's going on. I strongly suspect that this bozo will keep trying until he gets a sufficiently unscrupulous lender.

I don't think a lender like that exists, honestly.

[Seanette]

I hope for the sake of the homeowner who would be better off single that you're right.

[CyberLurch]

I'm thinking the relationship between this bozo and his girlfriend is not based at all on love. I'm betting he's soaking her for every dime he can, and when the well runs dry, he'll disappear.

[eltf177]

I think CyberLurch hit it on the head...

[sirwired]

Certainly the guy expecting to get a loan against the value of his GF's house is an idiot.

But I personally did not know that residence in a house you want a loan against was a requirement. Why can't you get an HEL against, say, a rental property?

[taxguykarl]

Agreed....and what other abuse is going on here?

[mhkohne]

I really hope you have some loophole in privacy regulations that would allow you to let the actual owner of the house know what's going on. I strongly suspect that this bozo will keep trying until he gets a sufficiently unscrupulous lender.

Unless he finds a lender who is willing to forge the owner's signature, he's stuck - without her sig, there's no lein, and the bank will never get a dime if he defaults (which is almost certainly the plan). And forging that kind of thing will get caught sooner or later.

[bankworking]

I really hope you have some loophole in privacy regulations that would allow you to let the actual owner of the house know what's going on. I strongly suspect that this bozo will keep trying until he gets a sufficiently unscrupulous lender.

It's not actually possible. A home loan still requires a mortgage to be recorded with the appropriate county, with the signatures of ALL owners (and spouse's of all owners) notarized on the form. You miss a signature, you got an invalid mortgage, and your home-secured loan is now a really cheap unsecured loan.

If his name was on the deed, I could do the loan in his name alone, but she'd still have to sign the mortgage part to agree to it.

[bankworking]

Certainly the guy expecting to get a loan against the value of his GF's house is an idiot.

But I personally did not know that residence in a house you want a loan against was a requirement. Why can't you get an HEL against, say, a rental property?

You can get a mortgage, just not a home equity loan. A rental is an investment property, so needs an investment mortgage. It's higher risk, cause you don't have as much of a personal interest. Home equity loans are already a second place lien on a property, so if you default, the 1st mortgage gets paid first and the home equity gets the leftovers...if any. So they aren't going to be offered for anything that doesn't have your primary interest in repaying. A home equity is generally betting on you NOT defaulting.

[Seanette]

It's not actually possible. A home loan still requires a mortgage to be recorded with the appropriate county, with the signatures of ALL owners (and spouse's of all owners) notarized on the form. You miss a signature, you got an invalid mortgage, and your home-secured loan is now a really cheap unsecured loan.

If his name was on the deed, I could do the loan in his name alone, but she'd still have to sign the mortgage part to agree to it.

Thanks for the info. If I'm reading this straight (given the Nyquil I took last night, could be iffy), the actual owner of the house would have to sign in front of a witness who would hopefully notice evidence of duress? I'm wondering if this bozo's determined enough to milk out that money that he'd try forcing her to sign or switching in an accomplice in place of the real homeowner. At least the requirement for a witness would rule out "take paperwork home for her to sign, do it himself without even telling her, bring it back 'signed'" stunts.