The question…

“I am refinancing my first mortgage with no cash out. I have a second mortgage equity line of credit and my first mortgage holder will not refinance unless I reduce my equity line amount from $21,000 to $5,800. My remaining balance on my first is $55,000. I have already re-subordinated the second mortgage. Can they refuse to refinance my mortgage if I don’t refinance my equity line.”

My answer:

Yes they can. They are not refusing but more like not approving you with your CLTV (combined loan to value). Loan to value (LTV) is your first mortgage amount compared to the value of your home and CLTV is your first and second mortgage amount compared to the value of your home.

Home equity lines of credit are getting reduced across the board in areas hit by declining values. So, first mortgage approvals are going to look much harder at second liens than they would have in the past. And once they take a closer look, they may decide they want less risk.

Even though the second mortgage decided your new first mortgage is acceptable and agreed to a re-subordination, the new first mortgage does not want to approve you with your current CLTV.

Thanks for the question…

Good Luck!

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