Subordinating behind a new FHA cashout 1st. (by: liverichly)

In an FHA cashout refinance of a subject which has been owned over 12 months, and meeting other FHA underwriting guidelines, a new FHA cashout refi loan of up to 95% is allowed as per guidelines. But what if the subject has an existing 2nd, say by another 20% of the appraised value (assuming $300,000 FHA appraised value), or $60,000. While the new FHA cashout 1st will be $285,000 approx. roughly, would the conventional 2nd be willing to subordinate behind? Because this would put the existing 2nd lender into 145% CLTV? No conventional 2nd lender guideline allows for more than 90% or 95% CLTV anyway. So, the FHA rule "Subordinating Liens: Subordinate financing may remain in place (subordinate to the new FHA 1st mtg.), regardless of the total indebtness or CLTV, provided borrower qualifies for all liens," could only accommodate private 2nd lenders who may have arms length relationship with the borrower. Anyone knows of any institutional 2nd lender who would subordinate behind FHA 1st beyond 100% CLTV, into the overequty zone, except the private 2nd lender? I am sure if FHA will allow subordination by private 2nd lenders under their allowable CLTV up to 150%. Anyone knows about this unclear point in FHA refi cash out? Peter - Last Post by: liverichly on 03/08/2008 @ 02:04 AM