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September 8, 2008
Mortgage Tax on a Refinance
Has anyone done this:
http://realestateqa.blogs.nytimes.com/2008/09/04/paying-mortgage-tax-on-a-home-refinancing/
It's a “consolidation, modification and extension agreement” to avoid paying mortgage tax again on a refinance.
Specifically I'm looking to know if all lenders will do this, or only some specific lenders that do this, and if so which ones. Are there restrictions on which old mortgages are eligible to be re-assigned to a new lender? Also how much additional time and expense are needed to complete this.
Comments
some lenders will cooperate with this and others won't. Some charge a fee -- we once paid $1500 -- for one. It's a big, fat, hairy pain in the butt to deal with but can save you thousands on taxes. If you have a mortgage broker s/he should be dealing with this. You have to contact your lender directly, if not, to as if they will.
Posted by: bricktop at September 9, 2008 8:58 AM
I'm looking at refinancing via the same bank I have my mortgage with. Via the phone, they told me I do not have to pay mortgage tax, but the documents said other wise, so some clarification from them is due.
Posted by: gates_ave at September 9, 2008 11:57 AM
It's called a CEMA. If you are only doing a rate and term you will not have to pay the mortgage tax. If you are doing a cash out you will have to pay the mortgage tax on the new money regardless if it's a CEMA.
current mtg 250k.
new mtg 400k
No CEMA 400k x 1.8% = $7,200 Mtg Tax
CEMA 150k x 1.8% = $2,700 Mtg Tax + Attorney Fees $1,000 = $3,700
Makes sense
Most banks will accept them, the question is if you existing lien holder will allow it. You incur a larger attorney fee from your new bank in most cases and the existing bank charges you for the service if they allow you to do it. It usually adds another few weeks depending on if the banks place nice together. I highly recommend doing a CEMA if you are borrowing a large sum of money, if you are looking at a small mortgage it may not be worth while
Posted by: Adam Dahill at September 9, 2008 12:49 PM
The only thing I would add to Adam's post is that if the loan has been sold, say to fannie mae or freddie mac, the bank will then charge you a nominal fee - a few hundred - to buy it back from the party they sold the loan to.
I've done it several times, and there is nothing hard or time consuming about it. It's well worth it.
Posted by: raphael9 at September 9, 2008 5:12 PM
CEMAs are well worth it. If you tell me which lender has your current mortgage, I can tell you if they will allow the CEMA and what their average turn time is. Couple of years ago CEMAs took a pretty long time but are done relatively quickly if it is handled by someone experienced. sunny_hong@countrywide.com
Posted by: shong1 at September 10, 2008 12:29 AM
HI Sunny. Do you work in Countrywide? My current loan is with Countrywide and I've been trying to ask the customer service dept if they know anything about CEMAs and if they're willing to assign the mortgage to a new lender, but no one knows what it is. Can you let me know which department I should contacat in Countrywide. Thank.
Pleasepost the answer here or e-mail me at soungchoi@yahoo.com
Posted by: chk207 at April 3, 2009 10:03 AM
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