I did a search and did not see this topic covered. Sorry if its a duplicate.

I am assisting a family member with a loan process. I am fairly financially savy, but this is out of my realm.

Due to divorce, the current family home is at present in both names as is the mortgage. Due to divorce decree, exwife is required to get house and mortgage out of exhusbands name, so a refinance is only option it would appear. Since her only current income at the present is maintainence support, which will drop significantly in 6 months, she would not quailfy for a conventional mortgage. She is looking for work, but not having success as of yet.

She is only concerend with the legal requirements, not whether the financial details and this concerns me. She is not financially savy at all and this is hindering my ability to help.

I am not familiar with this loan product/product/process so I dont know how to advise her. Anything I should look out for/keep in mind as I try to assist her.

Any website I could be directed to that would give impartial info on this topic? My initial google search came up with only lender sites.

Thanks for any direction,

Sue
Update, excellent credit, loan amt-$225,000, apraisal about $400,000, rate is 6.75 with a prepayment penalty.

Try the mortgage forum at creditboards.com. If you can't find the topic there, register and post it. The mortgage pros there are very responsive.

ThursdaysChild said:Try the mortgage forum at creditboards.com. If you can't find the topic there, register and post it. The mortgage pros there are very responsive.so are mortgage brokers allowed to solicit business openly there or do they have to pay a fee?

There are a ton of blanks that need to be filled before I could give you a better answer.

1. Her credit score
2. Mortgage loan amount

Get ready to pay a higher than normal interest rate...If she had docs I would say FHA, mmm I hope all the other debts (CC's, revolving payments ie car loans) are up to par.

SUCKISSTAPLES said:ThursdaysChild said:Try the mortgage forum at creditboards.com. If you can't find the topic there, register and post it. The mortgage pros there are very responsive.so are mortgage brokers allowed to solicit business openly there or do they have to pay a fee?

they used to openly solicit business there, but now it's on a wink wink basis

but those guys are slime and will put you into a monopoly money loan just for the commission. but they have been complaining there lately in their own mortgage broker forum that the only subprime left is FHA

Some of the details as I understand it.

Her credit is excellent, the highest tier. I dont have an exact number, but she has never been late with a payment.

Loan amount would be in the $225,000 range and house is appraising around $400,000, since there is so much equity, little risk to lender.

I think the rate is 6.75% but its interst only and a prepayment penalty if refi in 3 years. I dont like it and was wondering what other options she might have, if any.

Sue

I've been in the business for a number of years and 6.75 for a NO Doc right now is pretty damn good. No Doc is the only way from what you have described that she can go on this. The only bummer is that once she gets a steady job she is locked into that loan for 3 years unless she wants a prepay.

As for the legal requirements there isn't anything that is really required of her. No doc is just that - No proof of job, income or assets. There is also no requirement that she has any of these items. It is strictly a credit score driven program (assuming collateral (the house) is ok).

Unless she is using authorized accounts to boost her credit score for this loan, there is little legal recourse the bank/lender can take against her in the event of default.

OP, seems to me you are getting ahead of yourself. Can your friend make the monthly payments on this house, including taxes and maintenance ?

The bottom line here I think is that she is in a house she cannot afford. She has to start making plans to downsize. IF her income improves in the future, great. But making plans based on it happening, particularly since her job hunting thus far has not been successful, strikes me as a poor decision.

Now, if she is just trying to avoid being in the position of the 'motivated seller', I suggest looking into HELOC rather than conventional refi loans -- no doc or doc. Although they carry higher rates of around 8%, they are free to get, are still available in today's loan market, and can be offset with 0% apr credit cards, leading to less interest overall, and a smaller monthly payment. This will give her flexibility to either sell at market price, or get a job and perhaps stay in the house by re-fi into a conforming loan with documentation. Check with the lender who holds the current mortgage first.

This scenario happened to me, although the circumstances were different: My sister and I were left as co-owners of my mother's home when she died. Money was needed to fix the place up for sale, but I was not willing to front it, and my sister did not have the money. She ended up taking out a HELOC in her name that paid off the 1st mortgage, and gave her a credit line that she spent fixing up the house. At the time she said her credit was 'not great', and she was unemployed. I had to rescind my interest in the home, as will your friend's husband.

as Ive said in other threads, usually a divorce decree will allow the party paying the mortgage to keep the loan if they cant refi, and indemnify the other party. Did her attorney not recomment this provision?

This "we must refi" BS is very problematic especially in todays lending climate.