Question to all lenders regarding a home equity loan
My girlfriend and I are rehabbing a house and we have work set to begin in the near future. We are in talks with a lender and plan on taking out a home equity loan soon on the house we are rehabbing to finance the rehab.
This question is regarding a separate house, and a separate home equity loan. My girlfriend and her mothers names are both on the deed for this other property. Her Mom currently lives there, but the house was given to my girlfriend by her late Father. Her mom is listed as "lifetime estate tenant" on the deed.
Her Mom is attempting to take out a home equity loan on this property to consolidate credit card debt. My girlfriend is against this idea for many reasons, but most importantly because we believe it will jeopardize our DTI for the home equity loan (which we will both sign on) for the house rehab. This obviously puts us in a tight spot as we have work scheduled to start soon and need the loan to finance the rehab.
My question for lenders is, can her Mom take out a home equity loan on the inherited property of which she is listed as a lifetime estate tenant without the consent of my girlfriend (co-owner)? Just today a hard inquiry from the bank popped up on her credit report from CK. My girlfriend has signed nothing and gave no consent to have her credit run. We asked her Mom about it and she admits that she applied for the loan but denies having given my girlfriends SS# or info to the bank. We have not applied for any other loans and are not sure why this hard credit check has appeared on her report.
We need to stop this loan from occurring. What right does a co-owner (or lifetime estate tenant) have to the equity of a home? Does taking a home equity loan require consent from all owners on the deed? This is in Virginia.
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Exactly how is title held, when did Dad close a transaction with title insurance, until today? GF or Dad DIY title changes? First question is who owns the house and before Dad passed how did they set up or record the Life Estate. That's a legal issue which you need a title report and an a attorney to answer. With every deed recorded and date last used title my GUESS is this: Dad intended for Mom to stay until she died but did not intend for Mom to get a loan on the house. You need an attorney.
HELOCs are mostly an online application but because you state is a small local bank I GUESS Mom went in person and applied with a teller or the manager. Go there in person and find out who is on first. Then notice the bank President in writing. GF can stop this attempt BUT if Mom committed fraud to save herself, she will repeat the actions. Credit locks are pretty worthless, do it to slow down future problems. GF puts a written notice in all three bureaus that she is a victim of fraud. Make a police report, and keep a copy, generally the police do nothing.
Talk to Mom in a calm manner without GF, and get her story, listen and don't tell her you went to the bank or know the truth.
If Mom committed fraud, GF doesn't want her in jail. Mom has other non financial issues.
Do not have any mail delivered to house with GF name. USPS forward and pay for the permanent forward service. Don't tell Mom.
Next steps: GF talks to Mom about bankruptcy or counseling or both or where is Mom going when she cannot walk? Kindness with boundaries.
GF could record a big second trust deed to her own Living Trust which would stop any future second or HELOC as they have to order a payoff, licensee needs to help with this. Virginia requires a professional license, not necessarily an attorney- a title insurance company, RE Broker, or financial institution might help you.
As to your in progress HELOC you have another problem- if the lender does any physical or interior inspection they won't lend to you. HELOC's are low cost, digital, cookie cutter no exception type processing- you fit in the box or not. Your FICO is 720, you have w-2 income enough, the property has equity and is in great condition. If you demolished inside and they see it you cannot get a standard HELOC you will need to go hard money as most lenders are going to tell you that any worker who stepped on the site can lien the property and HELOC's do not use a new full title report, they rely on the title report of the last sale (again like I started with if people DIY record after closing it's a problem).