Finding a lender for a 2nd mortgage can be challenging, even at the best of times.
If you have a borrower looking to payout an already existing 2nd mortgage, this can sometimes prove to be more of a Herculean task.
Why is this? And what’s the difference?
Unfortunately for the borrowers in these situations, there’s one particular difference that lenders are all too aware of.
You see, lenders have years of experience reviewing and underwriting foreclosure history. Revealing a significantly higher default rate when new mortgage funds are used to pay out an existing second mortgage.
There may be numerous reasons for this. However, more often than not, it’s that the equity take-out did not solve the problem that it was meant to solve. This in turn creates an irrefutable wariness for lenders.
Now that being said, if you’re faced with resistance from lenders for this type of transaction, all is not lost. Focus your application on the story. The lender needs to see why and how the situation is materially different this time around. And the more detail that you can provide to support the difference, the better. If your borrowers have secured themselves a new job or promotion, have finalized a divorce, etc., this will help to support a credible story. These kinds of details go a long way in proving that the situation is, indeed, different this time.
Basically, no piece of evidence is too small or insignificant. And evidence that shines a positive light on the borrowers’ situation and shows how their situation has changed for the better is great. The underwriters at Kokanee Mortgage know that just because a borrower does not fit into certain parameters, this does not mean that that they’re unable to change their circumstances. If the evidence is there, we can look beyond the paper to see the people and the story behind it.