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HARP 2.0 Subordination on 2nd Mortgage Questions

Discussion in 'HARP Mortgage Loan Program' started by sparkler, May 18, 2012.

  1. sparkler

    sparkler LoanSafe Member

    I am in the process of trying to refi through HARP 2.0 as I was contacted by my primary lender (Chase). I was preapproved, told everything was fine, that the bank that holdes my 2nd, The Golden 1 Credit Union would have to agree to subordinate on the loan. The 2nd is for 26K and has about 7 years left on it. We are working at a CLTV of about 150%. Our home is in California.

    I have been reading about subordinating loans and the only two things I found about TG1 were that they denied the refi. One was because the payment was going up, the other did not say. This refi would save over $400 per month. We would not be adding anything to our principle balance. My husband and I have credit scores of 780+ and have NEVER missed so much as a PG&E payment, let alone a mortgage.

    I have 2 questions:
    #1 are we likely to be denied....if so I fail to understand why.

    #2 If we are denied, we have enough credit to write a check against a credit card. The bank doesn't seem to care about our debt, they just want to doccument it. Is this a reasonable option? Obviously if I had the cash to pay it off I wouldnt be paying $200 per month in interest on this loan.

    Thanks to all who repply, this has been really stressing me out, not a lot of sleep lately.
  2. Erik Sandstrom

    Erik Sandstrom Mortgage Expert - Call 1-800-779-4547

    Hi Sparkley,
    Welcome to the forum! Thank you for sharing your story with other homeowners.

    I have done many HARP transactions and to this day I have not had a problem with a 2nd mortgage subordination. If they don't agree to stay second position they are adding additional risk of foreclosure to your loan. And yes if you're denied the subordination which is highly unlikely you can pay the loan off.
  3. sparkler

    sparkler LoanSafe Member

    I received a letter from the 2nd yesterday....apparantly some of the paperwork that was needed to apply for subordination over 80% was not included in the packet. The letter said to send in the paperwork and they "may" consider the loan as long as "the new 1st is not for more than the current payoff amount", and closing costs are paid out of pocket and not rolled into the mortgage. I'm hoping they just want these papers to stuff their files.:sick:

    The paperwork was sent in yesterday and I am in front of my computer staring at my email waiting for a message to come that we were approved.....I really, really hope it happens. This is going to really in a way change my life...it will certainly releive a lot of stress.
  4. KayLake

    KayLake LoanSafe Member

    I'm going to ask a question that probably will seem rather silly but here goes. If I filed a chapter 7, did not reaffirm my first mortgage or my second mortgage, am current on my first and haven't paid on my second in 2 years am I even considered for a harp 2??? My thought is no because I did not reaffirm the mortgages. Please reply. Thanks!
  5. Erik Sandstrom

    Erik Sandstrom Mortgage Expert - Call 1-800-779-4547

    Hi KayLake,
    The one big qualification for HARP is that you need to have 0x30 day lates in the past 12 months. That would disqualify you from HARP immediately. The one option you have to retain your current residence is a loan modification. Also consider the mortgage debt relief act of 2007 which if you short sell your home or foreclose before the end of this year they won't come after you for the tax consequences.

    How long before a bankruptcy are you eligible for HARP?
    Bankruptcies require a 4-year time period re-establishing credit from the discharge of the bankruptcy for all types except Chapter 13. A Chapter 13 requires a 2-year time period to re-establish credit from the discharge date or a 4-year time period from the dismissal daye.

    There are extenuating circumstances for all bankruptcy actions: A minimum of 2 years from the discharge or dismissal date. No exceptions.

    Hope this answers your questions, and I'm always here to help!
  6. KayLake

    KayLake LoanSafe Member

    Erik,

    I was discharged from the chapter 7 and if I were to short sale there is no way they can collect on the deficiency. The discharge protects me of that since I did not reaffirm the debt. When you say no lates are you saying no lates on my first mortgage AND my second? If Im current on the first but not the second does that disqualify me? I have never been over 30 days late with my first in over 2 years.

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