MAMP 2013 January Legislative Update
Maryland's General Assembly is back at work in Annapolis and the Maryland Association of Mortgage Professionals (MAMP) has already jumped in the fray with its support for Senate Bill 199 and House Bill 88.
MAMP has already provided comment to the two committees that will hear the bills (Senate Judiciary and House Environmental Matters) and will also have a representative present to testify when the legislation is heard.
The bill (same in each chamber) states as its purpose: authorizing a mortgagor or grantor to refinance a first mortgage or deed of trust without obtaining permission from the holder of a certain junior lien under certain circumstances; providing that a certain refinance mortgage shall have the same lien priority as the first mortgage or deed of trust that it replaces; requiring a certain statement to be printed on a refinance mortgage; defining certain terms; and generally relating to refinance mortgages (For a copy of the bill go to http://mgaleg.maryland.gov/2013RS/bills/hb/hb0088f.pdf.
MAMP supports the bill as it believes it to be extremely favorable to consumers. The following reasons are given as support:
● Takes less time to complete re-financing.
● Can take a bank anywhere from a couple of weeks to four month to process a subordination request. A refinance generally can't even be submitted to the secondary mortgage/lien holder until original re-financing is fairly far into its process as the secondary holder often requires a copy of the first mortgage approval before it will consider the request.
● The longer it takes to get to closing, the more the borrower has to pay for a longer rate lock period and possible lock extensions
● Saves money for the consumer as no fee for subordinating lien holder to process a request (They usually charge $200-$500).
● Eliminates possible loss of negotiated re-fi as subordinate lien holder could say "no" yet borrower still have to pay for all costs incurred to that point. Note, MAMP is aware of several secondary mortgage/lien holders who delay the process as they try to get borrower to work with them and package two loans into one.
● The borrower is put into a more sustainable long-term loan and they stand a better chance of repaying both loans.
● Any subordinate lien holder will not be put into any worse of an equity position than their current position.
● More disposable cash available to pay first and subordinate lien holder.
● Comparable legislation in Virginia works well and benefits consumer.
● Many borrowers currently eligible for HARP refinances are not able to complete them because subordinate lien holders refuse to agree to subordinations. This Bill would allow many of them to complete a refinance, greatly improving their personal financial situation, where they are unable to do so now.
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