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Can I Refi My 1st Mortgage?

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Established Contributor

Can I Refi My 1st Mortgage?

I'm carrying a "silent" second mortgage on my house. My original first mortgage is variable rate and dates to 2007. 

 

Can I refinance my first mortgage even though I have a "silent second" mortgage on the home?

 

Thanks!

 

Message 1 of 5
4 REPLIES 4
Valued Contributor

Re: Can I Refi My 1st Mortgage?

Who is the second? Was it a special State or Federal Program. Need more info.
Message 2 of 5
Established Contributor

Re: Can I Refi My 1st Mortgage?

If the "silent second" will re-subordinate, then yes.

 

If that "silent second" is a Down Payment Assistance grant you might need to "repay" those funds if you refinance the first.   I think you need to review your original terms of that "silent second" to see what you need to do.   It's quite likely the answer to your question is written in latin and hidden somwhere within the promissory note or deed of trust. 

__________________________________________________

Licensed NC Mortgage Loan Originator
Message 3 of 5
Established Contributor

Re: Can I Refi My 1st Mortgage?


@NC_Mtg_Loaner wrote:

If the "silent second" will re-subordinate, then yes.

 

If that "silent second" is a Down Payment Assistance grant you might need to "repay" those funds if you refinance the first.   I think you need to review your original terms of that "silent second" to see what you need to do.   It's quite likely the answer to your question is written in latin and hidden somwhere within the promissory note or deed of trust. 


This is very helpful, thanks. Our "silent second" is a little unusual in that it was downpayment assistance in 2007 from my previous employer, a nonprofit organization. When the recession hit the following year, our property value plummeted by about 40 percent. When I changed jobs in 2012 and could not immediately pay them back, the organization wrote off its loan for tax purposes. However, they would like to recover the value of their original investment and thus probably will want to use my refinance as a way out. So they might ask me to refinance with "cash out" to pay off our second mortgage. Has anyone seen this done before?

 

During the recession, California enacted two laws to protect homeowners from deficiency judgments by second mortgage holders where the value of the home had significantly declined. However, we've paid down our first mortgage to the extent that the second mortgage holder could take all the remining equity in our home. We need to find a way out of this situation, perhaps by refinancing with cash out to pay them off. If we do that, we'll need to negotiate with the second mortgage holder regarding a settlement. Your advice is welcome!

 

Message 4 of 5
Established Contributor

Re: Can I Refi My 1st Mortgage?

I have funded many of these types of DPA's 2nd's over the years. Some are repayable and others are not. Some have recaptures and others do not, it just depends on which program you used. Your Note on the 2nd would reveal the terms of repayment. If you have a repayable 2nd, these can be paid off if there is sufficient equity in your home, or in some cases, the note can be subordinated to a new 1st Deed of Trust. An experienced LO can assist you in determining this.

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