How It Works
Unlike a standard refinance, refinancing the 1st mortgage of an 80/20 mortgage is slightly different and more complicated
(which is why most lenders don’t try to do this). The reason for this is complex.
A 1st and 2nd mortgage hold what are
called “lien” positions. With an 80/20, the 1st mortgage holds the 1st lien position and the 2nd mortgage holds the 2nd lien
position. The definition of a lien is:
“A legal claim against an asset which is used to secure a loan and which must be
paid when the property is sold”
Standard mortgage paperwork says that when you pay off the 1st mortgage (with a refinance), the
2nd lien holder automatically jumps to a first lien position UNLESS they give permission allowing you to replace the old lien
with a new lien (through the refinance). In layman’s terms, this means that in order to refinance your 1st mortgage, you need
to get permission from the holder of the 2nd mortgage. This is called “subordination.”
Technically, the holder of
the 2nd mortgage can refuse to allow this subordination, and this is where the process gets a little hairy. As the holder of
the 2nd lien, the 2nd mortgage company knows that if your house should go into foreclosure, they would get very little or no money
from the sale. In times of a declining markets such as ours, they know that they are in a very precarious situation. It
is our job to convince the holder of the 2nd mortgage that if they allow this subordination and give us permission to stabilize the
situation with your 1st mortgage (refinance), they stand a greater chance of eventually collecting their money!
One would
think that they would jump at this chance, but as we all know, logic and reason aren’t standard in the mortgage industry. Through
our many years of industry knowledge and experience, we have come to leverage our relationships with most of the existing mortgage
servicing companies to create win/win situations for both our clients AND your Lender.
This is where our banks are
different from other lenders on the market. Because our banks specialize in refinancing upside down 80/20 mortgages, they have
an astounding 92% closing ratio when the industry average is a paltry 28%!
The process for this type of transaction starts
out very similar to a conventional refinance. The bank would collect the following from you:
“Our original lender told us that home prices will never go down (sure!!!)– Thanks for helping us out of his lies”
Tara and Jim L. – Bloomington, IL
“Our lender from UpsideDown8020mortgage (Brissa) was great – She was able to explain everything in Spanish
so we could finally understand everything”
Jose and Josefina V. – Lodi, CA
“I would definitely recommend you to my friends”
Thomas S. – Durango, CO
“I was skeptical that you could help us out, but Bob did exactly what he said he could do and we ended
up saving $185 per month”
Dewayne H. – Mankato, MN
“You saved us $230 per month – You guys are the best!”
Rob S. – Fairmont, NC
“We were rejected by 3 lenders before we called you – thanks for helping us out”
Fred and Karen M. – Muncie, IN
"The Lender
who you recommended was terrific. The communication was always open and he kept me up to date the entire process. As a
bonus he was able to save up $230 per month"
John and Kathy B. - Orlando, FL
Once the bank has received all of the above information, they will then send an application for your review. Like any other
mortgage transaction, they will still need to send an appraiser to your property - the only difference is that with our program
we typically know in advance that the property has negative equity and will be worth less than the mortgaged amounts. However,
we still need an appraisal to ensure that your property is in a condition that will comply with FHA guidelines.
The bank
will then send the executed application along with the above information to their in-house underwriters who will then issue an approval
on your new 1st mortgage. Once they have this approval, they will forward it to your 2nd lien holder so that they may issue
their subordination agreement allowing the bank to move forward with the transaction (this might take anywhere from 2 – 6 weeks depending
on the timeliness of your current 2nd mortgage lender). When the subordination agreement is received, the bank will then schedule
a closing for you at a local title company so you can close on your new mortgage.
- Most recent pay stubs of all Borrowers covering at least a 1 month period.
- Most recent 2 years of W2 forms for all Borrowers (we will need most recent 2 years of your FULL tax returns if any Borrower is self-employed or works on a commission basis).
- Most recent asset accounts statements (bank statements, retirement statements, etc.) covering at least a 2 month period – We will need to have ALL pages, even blank pages.
- A copy of your most recent mortgage statements for both your 1st and 2nd mortgages.
- A copy of your homeowner’s insurance declaration page (this is for single family homes only). This is the document which shows us how much coverage you currently have along with how much your yearly premium is.
You Have Options.
Call Us Today!
1-866-928-0777
UpsideDown8020mortgage.com 1-866-928-0777 info@UpsideDown8020mortgage.com
