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litisham · Joined: 23 Jun 2009 Posts: 116 -0.62 Dollars($)

Why a silent second lien is dangerous for lenders?

gmakerley · Posted: Fri Aug 14, 2009 8:17 am Post subject:

can you please give us some background on what causes you to ask this question to begin with? silent seconds are not so silent as to be unknown to lenders, so it would be beneficial to know what you're talking about here.

you apparently like to pose questions that make sense to you; please also begin making sense to the rest of us, for the benefit of the community at large.

litisham · Joined: 23 Jun 2009 Posts: 116 -0.62 Dollars($)

its a generic question.

gmakerley · Posted: Fri Aug 14, 2009 8:29 am Post subject:

meaning what? is there a purpose for the question? is there anything behind the question that brings it up? can we help to bring understanding to anyone who reads this thread in the future?

those are not generic questions - they are real questions and not frivolous. we need to be discussing things that are beneficial to the community as a whole, honestly.

Posted: Fri Aug 14, 2009 9:00 am Post subject: Silent Seconds

Dangerous to lenders for at lest two reasons:
1. If a monthly payment is required on the silent second, the size of the monthly payment might make the debt ratio higher tha the lender would ahve approved in the first place.

2. If someone defaults on the second and the second holder starts foreclosure even though the first is being paid on time, it makes a big mess.

3. Most first mortgages have to be saleable in the secondary market
so the lender can get their money back after funding the loan. If the investor finds out about the silent second later on, they will make the lender buy the loan back.
4. I'm sure there are other reasons.

jveenstra · Posted: Fri Aug 14, 2009 9:01 am Post subject: Silent Seconds

I am the Guest who answered above but was not logged in.

gmakerley · Posted: Fri Aug 14, 2009 9:05 am Post subject:

i love your number 4 reason guest...it's a little controversial, though.

let's get this straight. "silent second mortgages" are generally those used to help a borrower who is short the funds to make a purchase, and they will more often than not accompany a specific type of first mortgage. inasmuch as a silent second (or soft second, in many cases) is issued at the same time as a first (purchase-money) mortgage, the lender on the first mortgage will absolutely know about it and factor it into its qualifying equations.

defaults of any kind "make a big mess."

if a silent/soft second is granted at the time of purchase on what is intended to be a saleable loan, then it will still be saleable - the lender wouldn't allow it otherwise. many of these loan programs that allow silent/soft seconds are community-type loan programs meant to give a lender credit under fair housing statutes.

gmakerley · Posted: Fri Aug 14, 2009 9:06 am Post subject:

well, john, then i am quite surprised at your number 4...i thought it was one of the "regulars" who said that!

in all likelihood, given it was you, it was meant as humor...right?

jveenstra · Posted: Fri Aug 14, 2009 9:14 am Post subject: Silent Seconds

George,

Computers and I do not get along well, what with double posts and all.

To me a silent second is one the first mortagge lender knows nothing about. The grant second mortgages have no payments due, but, the first mortgage lender knows about them, at least the ones I do which I note as plural becasue I have two right now---never any in 23 years before now.

Posted: Fri Aug 14, 2009 9:50 am Post subject:

it's a new dawn, i guess, john...for you anyway!

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