Second Liens Proving Hurdle on More Refis

American Banker (03/06/08); Launder, William
A drop in home prices is putting a damper on home equity lenders' ability to recoup their investments when homeowners refinance first mortgages, prompting National City Corp. to impose a new rule that puts a stop to requests that its lien remain subordinate when first mortgages are refinanced. According to attorney Jeff Naimon of Buckley Kolar LLP, "When the borrower goes to foreclosure, the second in many of these cases will end up with nothing." While experts say these policies are not illegal and simply involve banks taking steps to maintain their financial health, others worry that denying subordination requests and making it more difficult for homeowners to refinance will boost foreclosures.