Here’s a disturbing trend: some HELOC lenders are refusing to let borrowers refinance their original home loans unless the borrowers go through their company.

When a homeowner applies to refinance a property, he must first get permission from the second lien holder (i.e. the HELOC lender). In the past permission was taken for granted. But, due to troubled economic times, more banks are refusing permission or making additional requirements for borrowers.

ScrippsNews explains:

“A bank’s refusal to resubordinate can be costly to the homeowner. Caleb Shaffer has two mortgages on his duplex in Oakland, Calif. Both loans are with SunTrust. A credit union offered to refinance the primary mortgage at a lower rate, saving roughly $250 to $300 a month. Shaffer says he couldn’t go through with the refinance because SunTrust refused to resubordinate the second mortgage. SunTrust has received $5 billion in TARP funds from the federal government, or $34.13 for every working American.

Shaffer says he was told that he could refinance with SunTrust, but not with another lender. “They’re saying their policy is they don’t subordinate unless it’s within the family of SunTrust,” he says.”

If your HELOC lender is enforcing such policies, your refinancing options may be severely limited. If you’re considering refinancing in the future, think about applying now before more HELOC lenders adopt this method of securing your business indefinitely.

See Also:

Some HELOC Lenders Prohibiting First Mortgage Refinances

HELOC Freeze Help

Tags | Heloc, HELOC Lenders, home equity line of credit, refinance, second mortgage