No.Is it against the law to use home equity to purchase another property?
The bank's rules, obviously.Are we (unknowingly) trying to break any rules?
They probably need a reason under FCRA but making too little profit can certainly be a reason.The loan officer says that underwriters were unhappy because they realized the bank would make too little profit. Is that a good reason for loan denial? Or do they even need to provide a reason for denial?
That's right. Money grubbing vultures. Same thing happened to me. I called a couple of banks about a home loan against my house (which is free and clear) so I could buy another house, then sell mine and pay off the loan. Got the same reaction, turned down before I even got started.They were also concerned that we will move into another home, sell the 1-st one right away and pay off the loan.
I imagine you would get the same results if you ask for a HELOAN and reveal your purpose up front. Maybe not so if you ask for a regular mortgage loan with a prepayment penalty.Is it wise in this situation to apply for a HELOAN with another lender? I think it is not, because any lender will see a record of denied HELOAN. Will a lender be able to tell me upfront if they will grant a HELOAN for our purpose (despite a denial)?
No.Is there any way to appeal the decision? (or consider the loan re-evaluated)
The lender has no obligation to lend you money unless it with their terms. The "no" is final.
Being "aware" means nothing.The proposed closing for another house is in 5 days. The seller (and agents) are aware of the loan outcome.
It's what the seller wants to do if you can't come up with the purchase price that counts.

