Second Charged Off - Refinance Question

M

MDM

Guest
Hello,

I am currently in the process of a Cash Out Refinance application. I told the new lender my PNC HELOC was charged off almost 5 years ago, which didn't seem to bother them. Since this has been over the "cooling" period, what is the most likely outcome of this transaction?
  • I will need to pay off the second at closing in order to release the lien
  • There's a chance there is no lien on the second
  • The second will become a Jr lien and keep both mortgages
Thank you in advance!
 

Jzone

LoanSafe Member
Jun 20, 2017
136
12
18
69
Hello,

I am currently in the process of a Cash Out Refinance application. I told the new lender my PNC HELOC was charged off almost 5 years ago, which didn't seem to bother them. Since this has been over the "cooling" period, what is the most likely outcome of this transaction?
  • I will need to pay off the second at closing in order to release the lien
  • There's a chance there is no lien on the second
  • The second will become a Jr lien and keep both mortgages
Thank you in advance!
Probably option one: You will need to pay off the second before getting approved for another loan.
Check with your county register of deeds to see who is the lien holder now.
Doubtful that a new mortgage holder will take a junior lien/subordinate role. Its happened before but very unlikely.

Though it may seem that your new lender "didnt seem bothered" by a charged off loan, they soon will be when it gets closer to closing. A charged off loan shows that you are a greater risk. You may still get approved, but at a higher interest rate.
 
M

MDM

Guest
Thank you Jzone. We are indeed getting a higher interest rate but when I pulled the information from our online county register of deeds, only 1 Lis Pendens comes up and that's the original mortgage. Is there a possibility that PNC removed the liens once it was charged off? Thank you.
 

OneHugeMess

LoanSafe Member
May 30, 2016
413
31
28
PNC wouldn't remove the lien after a charge off. The only way they'd release the lien, is if you negotiated a payoff/settlement. Or... if it was eliminated through 2MP under HAMP, which I'm doubtful of.

Really, the only way to handle this, is to take out a Home Equity Line of Credit (HELOC) or Home Equity Loan, and have it in 2nd Place, paying off your 1st Mortgage, and moving PNC to First Place. PNC/NationalCity is not going to allow a subordination of any sort.

The other possibility, is rolling in the PNC Account into the cashout portion of your mortgage, and paying them off. Or... you could try to get a loan modification on your first loan, and leave everything as be. You won't get the cash-out proceeds you want though.

It's unfortunate - but this is a common problem.