non-conforming jumbo - Rate-Term vs. Cash-out
I spoke out the $100,000 limit on the cash-out conforming jumbo recently. Let me share something one Chase lender rep just sent me.
Borrower had purchase money 2nd HELOC (the money used to buy the house).
The borrower went back to SAME lender to modify from HELOC to a fixed loan. No cash was drawn.
Lender issues new loan number, a new note and records a new deed. Now he's trying to refinance the 1st and 2nd into a new conforming jumbo.
The new loan was submitted to Chase as a rate-term refinance because the existing 1st and 2nd were purchase money loans.
Chase's Underwriter countered the loan to be treated as a cash-out refinance as the current 2nd was no longer a purchase money, because it had a new loan #, note and deed or trust.
The broker and I pushed all the way up Chase Management and the answer was no. Then I had the broker call FNMA and when we got a positive answer asked Chase to call FNMA to confirm. FNMA said if the broker can provide the purchase money HUD1 and the HUD 1 for the refinance showing no cash was given and the same lender was used it is a rate and term! This means the borrower got the loan for 1 point less in fees which is about a reduction in the rate of 0 .375 %. That's a big savings.
Borrower had purchase money 2nd HELOC (the money used to buy the house).
The borrower went back to SAME lender to modify from HELOC to a fixed loan. No cash was drawn.
Lender issues new loan number, a new note and records a new deed. Now he's trying to refinance the 1st and 2nd into a new conforming jumbo.
The new loan was submitted to Chase as a rate-term refinance because the existing 1st and 2nd were purchase money loans.
Chase's Underwriter countered the loan to be treated as a cash-out refinance as the current 2nd was no longer a purchase money, because it had a new loan #, note and deed or trust.
The broker and I pushed all the way up Chase Management and the answer was no. Then I had the broker call FNMA and when we got a positive answer asked Chase to call FNMA to confirm. FNMA said if the broker can provide the purchase money HUD1 and the HUD 1 for the refinance showing no cash was given and the same lender was used it is a rate and term! This means the borrower got the loan for 1 point less in fees which is about a reduction in the rate of 0 .375 %. That's a big savings.
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