Alternative to refinance/equity loans (insurance, good credit, house)

[equity_finalize_divorce]

Dear friends,
I went through a pitched battle divorce and its finalized. I owe my ex $71k from the house with equity $150k+. I have very good credit score (740-750) and decent income ($160k on **1099**) and other retirement funds. I started working on 1099 for the first time in life and it has become pain in neck. All banks have minimum 2-yr 1099 tax filing, otherwise they just ignore you. I applied with Wells Fargo (who has my current loan), they estimated I will have to pay only $300 extra per month if loan gets approved. But then no word from them. My bank with whom having my checking/savings for last 15 years, is eager to give me a personal loan on 9% interest rate, but not a equity loan. I need $70k loan, bank is willing to give me only $37.5k for 5 years or $750/month payment instead of $100k or 70k laon, with $300-$350/month. I don't understand this stupid logic. They can trust me to pay $750/month, but can't trust me to pay $300/month ?!?!?!

I borrowed money from friends to give my ex. My biggest (and safe) assumption was I have very good credit score, decent income, decent retirement funds and good chunk of equity. Banks suggest me go back to work on W-2, come back and refinance in 6 months. I don't want to let down my friends' trust. I'm earnestly and honestly working and living by law. It bothers me so much genuine people are affected because some greedy people destroyed the lending industry. What options do I have other than waiting for 6 months to pay my friends with moving to W-2, refinance, etc?

Thanks

[SunnyDaz]

You can take a hardship withdrawal from your 401k and pay yourself back with interest so that there won't be a penalty. With your income you should be able to pay it back pretty quickly.

[blindside]

Originally Posted by equity_finalize_divorce

I borrowed money from friends to give my ex. My biggest (and safe) assumption was I have very good credit score, decent income, decent retirement funds and good chunk of equity. Banks suggest me go back to work on W-2, come back and refinance in 6 months. I don't want to let down my friends' trust. I'm earnestly and honestly working and living by law. It bothers me so much genuine people are affected because some greedy people destroyed the lending industry. What options do I have other than waiting for 6 months to pay my friends with moving to W-2, refinance, etc?

Thanks

I presume you want to keep the house?

[NC211]

Good suggestion on the hardship withdraw on the 401k. Or, if you have a life insurance policy, you can possibly borrower against that too.

I wouldn't necessarily take your frustration out on the banks though. You're a recent 1099, which in lending world, translates into less stable cash flow. It's not necessarily the amount you borrow, but the timing of which it will be returned. Remember, banks are lending YOUR money! They're not lending their own. If every loan went bust, guess what, you're only getting back what the FDIC (government) is willing to give back to you, which I believe is up to $250,000. The rest, you'll never see again. I know I'm not making you feel any better, wish I could, but the 1099 situation translates differently than a W2, in terms of stability. Also, it very well may be that FDIC guidance is what is preventing your bank from giving you what you want, regardless if you qualify or not in terms of income. The translation of the 1099 position could very well be coming from your bank's regulators and not from the lending committee of the actual bank. Not to turn this into a political debate, but Dodd/Frank and all of the other regulatory changes that have occurred in the past 5 years has significantly changed the way the financing world operates now. Significantly! Folks like to bark about how stingy banks are with lending money now, but in reality, in several ways, they're required to, and if they step outside of those parameters, the cost to do so to remain in business is tremendously high, too high to stay in business, unless if you're willing to pay, say 9%.