Can I be forced to pay off 2nd/line of credit loan before I can get a VA refinance on my 1st?

UPDATED: Sep 30, 2022

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Can I be forced to pay off 2nd/line of credit loan before I can get a VA refinance on my 1st?

At first they were going to charge me with a $250 subordinate fee to remain 2nd, but 2 days later I am being told they don’t want to remain 2nd, pay them off totally and then I can proceed with my refinance. Mind you the bank hasn’t any branches in my state. They bought up a bunch of loans from another bank. We have continued to make payments but now they want out? Is the legal? Can I be held hostage? Time is of the essence, as I’m .trying to close

Asked on March 2, 2017 under Real Estate Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Yes, this is legal. You are, based on what you write, asking them to remain subordinate on their loan when they don't have to--they would take precedence, normally, over a more recent re-financing. In short, you are asking them to give up some of their rights (e.g. the right to move up in priority). They don't have to do--you have no right to force them to give up *their* rights. Therefore, they can refuse to do this and/or put conditions on doing it. That it puts you in a bad spot is not their issue--they do not have to give up their rights to help you out.

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