Cash Out Refi or Purchase?
Parents own home but daughter lives in it and pays the mtg. Daughter wants to payoff parents' mortgage and get funds back to do work on the house. No contract for deed was ever done to 'payoff'

I want to say CO Refi, since daughter already lives there she should have ROR? ...but I have apparently not had enough coffee yet because it's not clear.

Is the daughter an 'owner' on the house? Remember - a refinance must be the same borrower(s). From your description I would state this is a 'home improvement' loan.

Nope daughter is not owner on home--not on title. Could parents qc home to daughter? Thanks for your help.

For secondary market, we require for an owner to be on title for 12 months before we can do a refinance when there is a mortgage on the property.

Anon - take a deep breath. What are you trying to accomplish here? If you want to make the loan to the daughter and she qualifies and the parents are willing to sign the deed or mortgage to collateralize the loan, what is the big deal? You make the loan, payoff the parent's loan and give the rest to the daughter. She doesn't own the property, so there would be no Reg. Z right of rescission for her and the parent would not have a right of rescission, because they don't live there. Suggesting the parents do anything, like a QC of the property to the daughter, should never come from the bank. That is a matter on which the parents need to be visiting with their attorney and financial planner. You are presented with the information as is and you decide if you want to make the loan. If their intention is for the parents to actually sell the property to the daughter, then you request all the standard documentation as you would with any other purchase transaction.

You're right, this was more confusing than it should have been. Too many suggestions and questions from others around me when I walked in the door had my head spinning... It boils down to parents want to sell property to daughter (they don't want to retain any ownership and add her to title) it should be a purchase.

I agree with what you have outlined.