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HARP 2.0 Subordination of 2nd Mortgage

I am going through the process of a HARP 2.0 refi on my home.  The bank I have my 1st mortgage with contacted me and go the ball rolling on this.  Everything has been waiting, ready to go, except the sub request from the credit union that holds the 2nd mortgage.  When we finally got a responce 22 days later, it was denied because the primary lender didn't send in the correct paperwork for subordination requests over 80% LTV.  I contacted the 2nd bank and was told the paperwork would be reviewed in 48-72 hrs of receiving it.  Its now been 6 business days, my nerves are shot to hell.  Of course I'm hoping that I haven't heard because the sub was approved and its going through underwriting.  Is this normal?  Not sure what to think.  If this fell through over a 24K loan, I'd be crushed.
  • June 01 2012 - Yuba City
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Answers (9)

Profile picture for karenms22
Still going....they keep wanting more and more documentation....why?  This is a subordination  Credit is 780+, never missed or made a late payment.  Why getting so detailed?  Is this a file stuffing frenzy?
  • June 07 2012
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Profile picture for Roseville Loan Guy
Karen,

What Justin said. If you were my client I would advise you to make the payment pretty soon if it wasn't clear you are going to close in the next week - ten days. The lender will have to update the payoff and lower your loan amount accordingly but that is their job.

I would NEVER tell anyone not to make a payment and not to worry about the late fee if the payment is late. Worst case, if it didn't close by the 15th, the lender sees the fact that it is late on the final payoff demand and opens up a whole different can of worms.

Sincerely,
Greg
  • June 01 2012
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I wouldn't worry too much.   Generally speaking, the second lien holder will very likely come through once your lender submits it properly.   This is very common problem.  
  • June 01 2012
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Profile picture for karenms22
The 2nd is with The Golden 1. The rep I spoke with there after getting the initial denial stating the package was not complete was extremely helpful and nice, and said they were extremely busy processing these requests. Thats why I haven't called them. The more time they spend on the phone with people like me, the less time they have to process.
  • June 01 2012
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Curious who the second lienholder is? I just went through a 6 week battle getting a credit union in California to subordinate, we did get them to agree eventually but it took some knowhow on how to go about it.

In your case, you mainly just want to make sure to keep the communication open with your lender and the credit union to make sure everyone is on the same page, and be patient allowing them time to make their decision.

As for the June 1 payment, while your subordination is in limbo, if you were my client I would advise you to make that payment.    The lender might need to adjust your loan amount lower as result, but this is not a difficult process to handle and is part of what you hire them for is to manage your file correctly.   It is also in your long term interest to keep your new loan amount as low as possible.
  • June 01 2012
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Profile picture for karenms22
I appreciate the responses.  The letter I got from the credit union (holder of the 2nd) basically said they "may make an exception if..." and went on to state terms specific to my loan (which I will definately meet), and it asked that the paperwork be sent in.  I scanned all the info into a .pdf file, sent it to the bank that is processing the HARP loan for me, and they sent it in to the credit union.

The other thing is they advised me not to make a June payment and said if we closed after the grace period they would take care of it.  I think I will make my June payment before the grace period ends.  I could see that being a huge issue.  Maybe I'm a bit paranoid, but I see this as something that will save me tens if not a hundred thousand dollars in the end, not because of lowering the monthly payment, but because I will be able to pay down the loan faster.
  • June 01 2012
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Profile picture for Roseville Loan Guy

Karen,

No, it is not normal (but not for the reason Ken said, being a broker has nothing to do with it, LOL). It just sounds like your lender submitted the request incorrectly, and now that they know they are (hopefully) fixing it.

I wouldn't worry too much about it not going through. 2nd lien holders are approving subordinations the majority of the time. They just tend to take their time and are sticklers about the paperwork. Generally speaking they would have no reason not to approve it as the refinance is going to put you on better footing financially, which protects their interests more than if you had to stay in your current 1st mortgage.

The only issue there might be is a rate lock expiring, but at this point that shouldn't be an issue because today's rates are as low as any day in history (if it expires your lender should be able to extend it or relock it for you for free).

I think waiting is your biggest issue at this point.

Sincerely,
Greg

Innerwork Mortgage
Roseville, CA

  • June 01 2012
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Profile picture for Brian GFL Capital
Depending on who the bank is that is holding the 2nd mortgage, subordination's can take a while. it sounds like updated paperwork needed to be sent over and if thats the case 6 days wouldnt be out of the ordinary. We just closed a loan with a BofA subordination that took 2 weeks to review the updated information and this was after we originally submitted the subordination request 3 weeks prior. We ended up waiting 5 weeks for a subordination request.

Although frustrating the larger banks are backed up to the point where all you can do is wait. you need them to approve the subordination so unfortunately your hands are tied.

now if your loan has been denied and you needed to start over, like the advice below,you are probably better off working with a broker that has more experience with the process
  • June 01 2012
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No it's not normal.  This is one of the reasons it's better to go with a Broker as we work with many different lenders and we work hard to get your loan closed.  We would have sent in the correct paperwork from the beginning.  The issue working with your existing lender or larger banks is the people that work there are only order takes and are very inexperienced to the actual loan process. 
  • June 01 2012
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