Ready for the Next Hurdle When Refinancing Your Mortgage? Second Liens No Longer Will Be Subordinated.

Have you ever heard that "March comes in like a lamb and goes out as a lion?" Well lets take a look at this little lamb called a mortgage.

Along with a new month we have new policies and news that directly affects if the average consumer will qualify for a mortgage. Lets see, we have:

• Mortgage Insurance - If your credit score is below 680 the price just went up and your number of options have gone down (I am not going to bore you with the details. Dozens of posts have done a great job of providing details. Here is a good one from Marlo Newman.
  
• Brokers/Bankers will no longer be able to order an appraisal - Shonda Blakely posted a great thread about New York Attorney General Andrew Cuomo. If he gets his way the only one that will order an appraisal after September will be Freddie Mac and Fannie Mae. Didn't these guys report a $6B 4th qtr, loss? Just to give you an idea of what that looks like = $6,000,000,000,00. Heck! that is only around $67,000,000.00 a day.
  Sounds like they need a couple of winning Power Ball Tickets. This week is only $153,00,000 but I guess every little bit helps.
  
  Ready for the Hat Trick?
  
• Lenders will no longer approve requests for subordinations from second-mortgage companies - Kenneth R. Harney from the Washington Post Writers Groups in Sunday's Chicago Times tells the tale of Robert Whittaker from Sykesville, MD. Whittaker contacted Immediate Mortgage Inc of Ljamsville, MD to refinance his interest-only-adjustable rate loan that was scheduled for a big payment reset. Robert is a high credit score client with about $55,000 in equity (after paying off the 1st and 2nd mortgage). Anyone that has done a subordination knows that while they may take a while they are routine. This one sounds like a "no-brainier."
  
  The broker submitted the request to the second lender, National City Corp. on February 1st. February 18, the bank told National City employees in an internal memo that it is no longer approving requests nationwide for subordinations from second-mortgage customers whose first mortgage was with another firm.
  
  The article then goes on to say that the change at National City illustrates how declining market conditions (currently no markets in Indiana have this tag) are affecting borrowers with second liens. Not only are equity lines being frozen or reduced, but issues such as subordination stymie borrowers' attempts to refinance.
  
  Now the article did not point this out but currently when a home goes into foreclosure and it has multiple liens, the sale proceeds pays off the balance on the first mortgage and then subsequent liens. As you can guess, today's market does not have a positive forecast for home appreciation leaving the lenders holding second-mortgages, HELOCS, and third mortgages with nothing to go after. 

Welcome again to March 1, 2008. Sounds like we are going to have a heck of a start. Just hope that this year March comes in like a lion and goes out like a lamb. Remember the reason I will post a thread like this is to help. It is great third party information to share with your clients. Many folks are just waiting. Maybe something like this can get the waiting to stop and the buying to begin. If you have clients in Indiana and need some help with their mortgage. Give me a call or drop a email. I am the real estate agents friend.

Tony Grego - Indiana Mortgage Company

 

Quote of the Day:
You are not what you own.
--Fugazi, American rock band