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Old 03-05-2013, 02:34 AM
 
1,502 posts, read 2,656,542 times
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I am about to close on a HARP 2.0 Refi in Virginia. Virginia has automatic suboordination. Bank of America owns the 2nd loan and another bank will own the first now.

My home is seriously under water.

I owe about 38k on my second loan at an interest rate of 9.875% (bought house in 2007 when my credit score was 680).

The second loan is a balloon loan and the term is 15 years. I have been paying on it for nearly 6 years.

I asked the broker what I should/could do about the second loan.

He mentioned loose terms like BOA has lost it's "leverage". That BOA may be forgiving 2nds at some point but he has no ideas what the criteria for that will be. He said that once I am done with this refinance, I should try to negotiate directly with Bank of America.

I am wondering if you understand any of this or think it's valid or even have any idea what I can do if anything at all?

If I was to call BOA, have they really lost any leverage to the degree where they would want to reduce my interest rate? I seriously doubt it in all my past dealings with them.

All they have ever done is hang up the phone and drop calls when I applied under MHA years ago.

Thoughts on how to proceed?

Thanks
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Old 03-05-2013, 12:29 PM
 
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They haven't lost any leverage. And I'm unclear on "automatic subordination." Typically, you need the 2nd lien holder's permission and timely cooperation when asking that they re-subordinate. In HARP-like situations, it's a "make sense" move for them, because allowing for refinance of the first decreases their risk of loss.

Having said that, just know that the halls of B of A are stacked, floor to ceiling, with files and files of REO properties, 2nd liens, first liens, upside down loans, and they are terribly, terribly understaffed.

If they have to re-subordinate, I wouldn't expect timely communication. Or that they just up and forgive the debt.

Brokers.
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Old 03-06-2013, 12:18 PM
 
Location: Plano, Texas
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There are a few states that have auto subordination where you dont need the 2nd lien lenders approval to refinance the first. Texas is one of them and i actually know a loan officer in Virginia who helped get the auto subordination passed there a couple years ago.
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Old 03-06-2013, 09:22 PM
 
3,805 posts, read 9,288,632 times
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Quote:
Originally Posted by VictorBurek View Post
There are a few states that have auto subordination where you dont need the 2nd lien lenders approval to refinance the first. Texas is one of them and i actually know a loan officer in Virginia who helped get the auto subordination passed there a couple years ago.
I'm sorry but I've been lending from Texas for years and we need to get the 2nd lienholder's permission, I literally had to do this three weeks ago.
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Old 03-08-2013, 08:21 AM
 
1,263 posts, read 3,270,239 times
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Your brokers statement about "losing leverage" is weird. I don't see why BOA would agree to reduce your rate on the 2nd unless you paid a fee to have them do it, and they certainly aren't going to "forgive it". BOA is certainly not known for giving money away (LOL) and they know you can't refi anywhere else.

Sorry.
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Old 03-08-2013, 10:39 AM
 
5,340 posts, read 14,083,756 times
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Quote:
Originally Posted by va_lucky View Post
I am about to close on a HARP 2.0 Refi in Virginia. Virginia has automatic suboordination. Bank of America owns the 2nd loan and another bank will own the first now.

My home is seriously under water.

I owe about 38k on my second loan at an interest rate of 9.875% (bought house in 2007 when my credit score was 680).

The second loan is a balloon loan and the term is 15 years. I have been paying on it for nearly 6 years.

I asked the broker what I should/could do about the second loan.

He mentioned loose terms like BOA has lost it's "leverage". That BOA may be forgiving 2nds at some point but he has no ideas what the criteria for that will be. He said that once I am done with this refinance, I should try to negotiate directly with Bank of America.

I am wondering if you understand any of this or think it's valid or even have any idea what I can do if anything at all?

If I was to call BOA, have they really lost any leverage to the degree where they would want to reduce my interest rate? I seriously doubt it in all my past dealings with them.

All they have ever done is hang up the phone and drop calls when I applied under MHA years ago.

Thoughts on how to proceed?

Thanks
Guessing your second mortgage may be a fixed rate at that 9.875%. You may want to inquire and see if they could "un-fix" it to a variable rate based on prime. Your rate may go way down. I had a fixed rate 2nd at Wells Fargo at 9%. I had them change it to variable based on prime and my rate dropped to 4%.
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Old 03-08-2013, 11:58 PM
 
1,502 posts, read 2,656,542 times
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Check this out:

Automatic Subordinations in Virginia | Charlottesville Real Estate Blog

Quote:
Originally Posted by Pfhtex View Post
I'm sorry but I've been lending from Texas for years and we need to get the 2nd lienholder's permission, I literally had to do this three weeks ago.
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Old 03-08-2013, 11:59 PM
 
1,502 posts, read 2,656,542 times
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Hey that is ok...just looking for some clarity. I can't imagine BOA losing any money lol.

Quote:
Originally Posted by LOL_Whut View Post
Your brokers statement about "losing leverage" is weird. I don't see why BOA would agree to reduce your rate on the 2nd unless you paid a fee to have them do it, and they certainly aren't going to "forgive it". BOA is certainly not known for giving money away (LOL) and they know you can't refi anywhere else.

Sorry.
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Old 03-09-2013, 12:01 AM
 
1,502 posts, read 2,656,542 times
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Nice idea....do they have any incentive to do it? How did you manage that? Any worries that the interest rate may go about that fixed rate of 9.875% (You are right it is fixed).

Thanks

Quote:
Originally Posted by TimtheGuy View Post
Guessing your second mortgage may be a fixed rate at that 9.875%. You may want to inquire and see if they could "un-fix" it to a variable rate based on prime. Your rate may go way down. I had a fixed rate 2nd at Wells Fargo at 9%. I had them change it to variable based on prime and my rate dropped to 4%.
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Old 03-11-2013, 08:59 AM
 
5,340 posts, read 14,083,756 times
Reputation: 4699
Quote:
Originally Posted by va_lucky View Post
Nice idea....do they have any incentive to do it? How did you manage that? Any worries that the interest rate may go about that fixed rate of 9.875% (You are right it is fixed).

Thanks
Just called them up. A fixed rate 2nd mortgage always has a higher rate than a variable. Yours was fixed when all rates were higher. Variable rates are super low right now. Yes, there is risk that the rate could rise in the future. You could/should take the rate savings and put it toward paying the 2nd mortgage down that way rate fluctuations won't have as big as bearing.
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