I wanted to refi my 1st only and leave heloc open as it is estranged husband's debt. I specifically asked prospective lenders if they are willing to subordinate the loan with the holder of the 2nd.
I even asked if there was a situation where they would not subordinate. They only said "it just depends on the other bank's policy regarding subordination." The loan-to value ratio is an incredibly low 16.7%! my credit rating is 780. After three weeks of the most rigorous document demand of any closing I've ever been through (including 3 business property closings) they denied me because the heloc had a pre-payment penalty.
They won't subordinate when there is a pre-paymment penalty. They conveniently forgot to tell me that when I *very specifically* asked about subordination and what would prevent subordination. Two bankerss at Wells Fargo told me AmeriSave never even *requested* subordination, only *payoff* information. Secondly, I'm in the 2nd year of the heloc and the pre-payment is a whopping $500 at this point.
And besides, *I was not going to prepay* Can you say *smoke screen* *only interested in the up-front fee*? Plus they recently lost a lawsuit regarding other misrepresentations.
Beware! If already in process get a Buyer's closing attorney and owner's title insurance to protect yourself at the very least!
Monetary Loss: $440.