I'm looking to interview people who have ARMs and would like to refinance -- but they're underwater and can't refi. Does that describe you? Are you willing to be interviewed and quoted by name and city? Then e-mail me.
By the way, I don't know the solution to this issue of having an ARM and being underwater and wanting to refi. I talked to a mortgage lender today who said those borrowers are stuck, unless they can get a Home Affordable Refinance Plan, or HARP, refi. He said to look on the bright side: Lots of people with 5/1 ARMs are seeing their rates adjust downward at that five-year loan reset. If any loan officers want to talk to me about it, click on that e-mail link above.
On a related matter, a reader named Cheryl responds to my article about refinance roadblocks. She writes:
Being underwater is not the reason I cannot refinance. I have perfect credit, not underwater, but the reason I cannot refinance is because I have an equity line of credit. Since I negotiated such an excellent rate for that line (2.125%), if I refinance my first, the bank holding the second wants to jack up the rate when they have to subordinate it. So, it would not make sense to lower my main mortgage and jack up the rate on the second.
I wish there was a way around this. I feel it is completely unfair. I imagine there are lots of people in my shoes.
I don't see how the bank holding the second has a right to modify the rate just because I refinance my first mortgage.
No, I don't have any ideas. From the borrower's perspective, I think this is an insoluble problem. I wish I could say different.
Actually, after writing the above paragraph I did get an idea. Try refinancing with the same lender that has the line of credit. You might be able to talk them into resubordinating since it will be the same lender.
Yes, it's unfair, and I wouldn't be surprised if the Consumer Finance Protection Bureau addresses it someday. But the CFPB won't be up and running for at least six months, and resubordination reform won't be high on its packed agenda.
Are you going to follow me on Twitter @HoldenL or are you going to remain in the dark? Your choice.