In the Gulf Coast region, many of our properties have U.S. Small Business Administration disaster loans on them, usually in second or third place. First Title Real Estate, LLC closed many of these loans. In 2007 & 2008, SBA would allow you to refinance your first mortgage, subordinating theirs with little restrictive requirements. It has since changed. SBA requires their form 770 to be filed out, a sort of mini financial statement. In addition, some of their requirements can include:
A letter of explanation of the reason(s) the subordination is being requested
A copy of the loan application
An appraisal of the subject property that is less than one year old
Verification of the balance(s) of the mortgages that are superior to their mortgage
An official title report of the property
A preliminary settlement statement reflecting teh intended disbursements
At this time, the biggest hurdle is NO CASH OUT over $2,000.00. You cannot payoff your vehicle, your credit cards, other lines of credit or anything else unless you are willing to inject 50% of the principle owned to SBA. It has halted many refinances here locally.
I understand their position. The disasters keep coming and repaying and/or paying down SBA loans refills the coffers so new loans can made to others without having to "find" the money to lend. It is disappointing when you are turned down, but chin up!! SBA money was lent at a rate of less than 3%. That is a very good rate and still hard to match.
To my knowledge, SBA doesn't report to the credit bureau at this time so it can be a surprise to the lender that you have an SBA mortgage. Before you dig deep into attempting to refinance your home, give First Title Real Estate, LLC a call. We can check the mortgage records, confirm what is out there, and give you a head start with the paper work SBA requires.