Consolidating key alternative loans
If a homeowner qualifies for a HARP refinance on their first mortgage and they also have a second mortgage, they need permission from the second mortgage company to refinance. Many of the lenders who hold the second mortgages were not approving subordinations on HARP loans when the program was introduced.I’m happy to say that almost every major bank is now approving subordination agreements if the person refinancing is seeking HARP loan.
We are talking about responsible homeowners whose tax dollars helped pay for this program.
We are talking about responsible homeowners who need a fair refinance.
One of the most frustrating elements in this is that HARP refinances not only help the homeowners, but it actually IMPROVES the position of the second mortgage company.
I was shocked to recently learn that Key Bank, one of the nation’s largest bank-based financial services companies, has a policy against subordinating.
My understanding is that Key Bank will not subordinate a second mortgage above 100% value, or if the home value has decreased since the second mortgage was originated.
This has major implications for homeowners, and it’s a slap in the face to the government officials who fought to put the HARP loan into effect.
The whole purpose of HARP is to benefit homeowners who have paid their mortgage on time and who need to refinance.
The most difficult hurdles to overcome when helping HARP loan clients are typically placed by the homeowner’s existing lenders.
Thankfully, the second mortgage companies have become much more lenient and willing to play ball.
Companies are typically going to be okay with subordinating their loan if the homeowner is working on a HARP refinance on their first mortgage.
I’ll explain what this means, but it hasn’t always been the case.