He didn’t have to mention HELOC. I’m 99.5% sure it’s a HELOC based on the details.
MM…. If the HELOC is left in 2nd position, it’s going to require a subordination whether it is at zero, maxed out or any balance in between. It’s probably going to cost $250 to subordinate.
Another recent issue recently is Solar lien subordinations, which can also delay loan fundings. . . .
Self employed people with a 680 credit score and lots of debt can get approved for 97% LTV loans.
Loans are approved on income & expenses.
They are priced on a combination of credit score & equity.
Lots & lots of people get approved with 3% equity.
Lots of people with 800+ credit scores and 50% equity get turned down, even if they have $1 million dollars in the bank. . . .
There are people with $1,000,000 homes with an 800 credit score, $1M in the bank and no mortgage who don’t qualify for a $200,000 refi loan . . . .[/quote]
HLS, I glanced at the OP when there were no responses to it on Friday and my first thought was that he would be required to subordinate, regardless of the balance (or no balance) on his HELOC. I’ve seen this scenario played out dozens of times and I have never been a loan officer or broker. I didn’t have time to respond at the time but you responded in much more infinite detail than I could ever explain it. Thanks for reiterating the nonsensical gubment lending regulations arising out of the “mortgage crisis” of the aughts. Now that there are few to zero “portfolio lenders” to choose from, stupid reigns over common sense. Stupid is as stupid does but it’s “good enough for gubment work.”
Yeah, everything you posted here about high-asset, “low-income” individuals (even those with stellar credit) not being able to qualify for a small (“conforming,” in gubmentese) mortgage is now true since virtually *all* mortgages offered today are gubment-backed in some fashion. Of course, these high-asset people can always pay cash for a RE purchase. I actually know people who fit your description of owning a residence (free and clear) worth >$1M with a 740+ credit score and plenty of other assets (both liquid and illiquid) who cannot qualify for even a $150K mortgage today!
Instead, they get mailers every week advertising (usurious) “reverse mortgages” . . . LOL.
Our gubment’s nuevo-“organized” secondary mortgage markets have now decided they will “categorize” potential borrowers into meaningless little groups solely based upon their current income (but not taking into account their YUGE monthly childcare expenses, for example) in calculating their back-end ratios for a mortgage. Their ridiculous underwriting methods contribute to financial suicide for young families … especially those who are buying with FHA/VA or 95% conventional mortgages with hefty up-front and/or monthly MIP/PMI premiums or an up-front (100% financed) VA funding fee and thus are underwater the day after escrow closes.
In recent years, the NAR has been pushing the Obama Administration relentlessly to increase homeownership among the masses when the masses actually have no business being homeowners. And it has worked. Witness the sheer amount of recent homeowners who can’t afford their water bills or to repair their broken down vehicles parked on the street just months after purchasing their first homes. And this is in areas where no MR/HOA exists!
