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#2049645 - 11/13/15 09:10 PM Borrower with bad credit
Compliance Action Subscriber 1226 Offline
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We have a customer with horrible credit that wants to borrow money using her acreage and real estate as collateral. Her only income is $500 a month. Her father, 86 years old, will be co-borrower and will be on the deed as well. Her father has sufficient income to support the loan, but will not be living in the home. Can we still use his income for debit to income, even if he does not live in the home?

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#2049684 - 11/13/15 11:00 PM Re: Borrower with bad credit Compliance Action Subscriber 1226
Rocky P Online
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Florida
Welcome to BOL.

Your bank's loan policy should dictate what is acceptable for borrowing, and should cover these scenarios e.g. ("we will lend where there is an acceptable co-borrower" . . . or . . . . . "a co-borrower can add credit strength where the applicant has limited credit, but not as a substitute for bad credit". . . .)

The concern might be the age of 86 and any type of elder abuse laws. I'm thinking if there are other siblings, and dad passes away, with most of his fortune tied up with one child. The others could try to implicate the bank.
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#2049711 - 11/16/15 03:54 AM Re: Borrower with bad credit Compliance Action Subscriber 1226
Andy_Z Offline
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Essentially my answer is "joint applicants are joint applicants." If dad was a cosigner/guarantor I'd quickly say he doesn't make up for bad credit.

I'll join Rocky on this one as many times I've seen mortgage apps lose an applicant (denial/WD, etc.) based on one of the applicants qualifying and the app would proceed under that person. Here, what is the loan for and is dad getting it or just signing so the child can get the loan?

If dad were a 46 year old with a coapplicant, how would that be treated? I believe the latter is your answer.
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