Am I just not getting it? Where is the COMMON SENSE?

Client owes $140k on their first mortgage; $130k on their 2nd and $17k on their 3rd.

They have been APPROVED for an 85% LTV (loan to value) and a 90% CLTV (combined loan to value) with FHA. We are consolidating their 1st and 2nd into one loan and subordinating the 3rd loan, which will be the new 2nd. Saving the borrowers $1000/month!

We are NOT adding to the 1st mortgage: it is simply $140k+$130k=$270k. The 2nd lien position (formerly the 3rd lien) will be $17k. So, there is NO cash out.

Guess what? The 3rd lien holder is unwilling to subordinate! They are now going into 2nd position, but they refuse to agree to this refinance. Why? According to their rules: they can not allow a subordination over 80%. They will be at 90%. Well, HELLO!!!!! They are already at 90% without us doing anything. Plus, they are in 3rd position, which is WORSE than 2nd position.

Am I MISSING something? Is it me?

This is going to save the borrower $1000/month! Which they have every plan of using this money towards getting rid of their credit card debt and then the $17K 2nd lien.

Without this refinance, they are struggling to make payments. They have not missed a payment, but this is how people lose their homes! The banking industry is not using COMMON SENSE!

I have intentionally omitted the lender’s name refusing to subordinate their 3rd position into a 2nd position, but it is a lender which has received a lot of the taxpayer TARP money! As a loan officer, owner of a mortgage company, financial adviser and a taxpayer, I AM NOT HAPPY!

These clients deserve a refinance!

AM I MISSING SOMETHING?????!!!!!