Is it necessary to specify HELOC as the assignment type?

[Train66]

Scenario:
The client (a major lender) indicates the intended use to be "refinancing."
Upon visiting the property, the keyholder shares that she is applying for a home equity line of credit. No further details.

1. On the 1004, what is the Assignment Type?
2. Is it recommended to seek more details about the nature of the loan to gauge risk exposure?
3. Is it pertinent to the appraiser if the HELOC is separate or combined with an existing mortgage?

Edit:
It seems there are two main types of home equity lines of credit:
i. one that’s combined with a mortgage.
ii. one that’s a stand-alone product.
Resulting in question 3 above.

 

[Fernando]

Look at your order or engagement letter. Just state what lender indicates.

 

[BRCJR]

Scenario:
The client (a major lender) indicates the intended use to be "refinancing."
Upon visiting the property, the keyholder shares that she is applying for a home equity line of credit. No further details.

1. On the 1004, what is the Assignment Type?
2. Is it recommended to seek more details about the nature of the loan to gauge risk exposure?

A HELOC is considered refinancing

 

[Train66]

A HELOC is considered refinancing

There are two main types of HELOCs: stand-alone or combined with an existing mortgage.

If the client simply states 'refinancing' is it reasonable to assume that it would be the latter type? Otherwise, 'refinancing' doesn't sound accurate. I'm confused. I really don't know.

 

[andrew81]

3. Is it pertinent to the appraiser if the HELOC is separate or combined with an existing mortgage?

No.

 

[sputnam]

No... but, you can check 'Other' and write in HELOC if you want to... or call it a 'Refinance Transaction'. The Intended Use is still for use in a mortgage finance transaction.

 

[Vermonter]

If the client simply states 'refinancing' is it reasonable to assume that it would be the latter type? Otherwise, 'refinancing' doesn't sound accurate. I'm confused. I really don't know.

May be different rules or definitions north of the border, but are you saying only a cash out new mortgage would be considered a "refinance"?

 

[Train66]

May be different rules or definitions north of the border, but are you saying only a cash out new mortgage would be considered a "refinance"?

Yes.
Frankly, I don't fully grasp the different home equity loan types. What is a first vs second mortgage, refinance vs non-refinance... And mostly how such details impact potential risk for the appraiser.

 

[BRCJR]

Yes.
Frankly, I don't fully grasp the different home equity loan types. What is a first vs second mortgage, refinance vs non-refinance... And mostly how such details impact potential risk for the appraiser.

If you apply for a mortgage loan it is either to be a party to purchase a property or be a party to refinance a property.
You can structure loans many different ways.
The terms are different for the different structures.
A line of credit is just one of those structures.

 

[Vermonter]

Yes.
Frankly, I don't fully grasp the different home equity loan types. What is a first vs second mortgage, refinance vs non-refinance... And mostly how such details impact potential risk for the appraiser.

If the property isn't changing hands, it's a refinance. You are providing an opinion of market value, not making decisions on credit so not sure where the additional risk would be?

There may be a difference in risk between a 1st and 2nd mortgage, but that would be between the borrower and lender and would not impact our scope of work.