Devoted to interest rates, loans, and lending institutions

When it comes to second mortgage financing, things are getting difficult. You thought it was hard to for someone to buy a home? It's even hard to get the financing for a second mortgage.

With home values declining, mortgage lenders are reluctant to give out second mortgage financing becuase of how quickly negative equity could become a reality. Not to mention the "economic slowdown" means that things could ugly for a borrower really fast -- leaving mortgage lenders with no choice but to foreclose.

The Industry Report offers this example of a letter from underwriting about a second mortgage application:

"The second mortgage market is very volitile at this point and we had eliminated second mortgages altogether for a good 6 months or so.

Since the reinstation of the program we decided that we would only offer the second mortgage product to current customers as a benefit to them, but since the market is weak for second mortgages we have not opened the option back up to all borrowers only current customers.

Thank you

       Flagstar Bank
      Underwriting Support Desk 

This is becoming a rather standard practice as the mortgage market tries to figure things out.