We’ve covered options for refinancing the CalSTRS 80/17 pretty extensively.
There are several viable options available to homeowners for refinancing that include:
- Paying down the principle balance to create enough equity to refinance.
- Combining the first and second mortgages into one loan as long as home values have increased enough allow it.
- Go directly to the previous master servicer, Bank of America, and ask them to resubordinate the second mortgage and allow you to refinance the first mortgage only, leaving the second mortgage in place.
We have had success with homeowners with the CalSTRS 80/17 mortgage refinancing using the first two options. Approaching Bank of America and requesting that they allow you to refinance the first mortgage while leaving the second mortgage in place has reaped almost no results.
I have heard of instances of Bank of America cooperating and allowing homeowners to resubordinate the second mortgage, but only after months of phone calls, follow up and ultimately an “exception” from some higher up manager that we are unable to locate or replicate.
In short, the B of A option seems like more of an urban legend than a viable solution.
Since home values have dropped so much over the years, many homeowners are slightly, if not severely upside down with the combined first and second mortgage far exceeds the value of the property.
If a homeowner is allowed to refinance only the first mortgage and leave the second mortgage in place it would save owners hundreds of dollars and allow these folks to take advantage of historic low interest rates.
eMail from CalSTRS about Refinancing 80/17
Last week, a long time reader of our site sent me an email that they received from CalSTRS inquiring about whether a new master servicer would mean that 80/17 homeowners would have the ability to refinance the existing first mortgage while resubordinating the second.
Here is the response from CalSTRS:
Thanks for submitting a question to “Ask Jack.”
CalSTRS staff is currently scoring the respondents to the Home Loan Program’s Master Servicing Agent/Program Administration Request For Proposal (RFP) and intends to have a selection made by the end of January.
Subsequently, we will be able to explore program offerings such as the feasibility of including a refinancing alternative for existing borrowers; however, CalSTRS would likely have a passive role in such a refinance program, and would require the contracted master servicing agent to agree to provide CalSTRS with performance reporting on any refinanced first liens before allowing the CalSTRS owned second lien to be resubordinated to a new first lien.
This visibility is necessary in order to properly value the CalSTRS Home Loan Program’s portfolio of wholly owned second liens
The way I read this, it’s not a “NO”. It sounds like it is at least on the table and will be a discussion that will be had with the new CalSTRS master servicer. We will keep an eye on this story and let you know if anything comes from it. If you have any information from CalSTRS about progress or development with their home loan programs, please do share.
We have hundreds, if not thousands of educators and employees of the public school system that read our site and will benefit from sharing any information you have about developments regarding the home loan programs. Thank you for your contributions and updates, keep them coming!