Editor’s Note: The HARP program expired Dec. 31, 2018, but most homes have increased in value considerably since HARP rolled out. This means many homeowners may currently be eligible for a standard conventional refinance

Q: I have applied for a HARP refinance. My HARP lender is telling me that my second mortgage holder won’t budge and let me increase my first mortgage loan amount. Now my HARP lender says I need to bring $3,400 to the table to close the loan. Why can’t they waive costs?

-Concerned MyMortgageInsider Reader

A: Before we tackle the question about waiving costs, let’s look at the root of the issue.

It sounds like your second mortgage lender doesn’t want you to increase your first mortgage loan amount. They’re limiting it to what you owe now. In their minds, a higher first mortgage loan amount puts them at greater risk of not getting their money back if the home is foreclosed upon.

So their way of stopping that risk is to refuse to subordinate their loan behind the new HARP mortgage if that new mortgage has a higher loan balance than your current loan. Without that subordination, the HARP lender won’t approve the loan.

But if you choose to get the subordination and keep your loan amount the same, you’ll have to pay refinance closing costs out of pocket. That’s why the new HARP lender is saying you need to pay $3,400.

About waiving the costs, these are real costs of the loan that the bank can’t absorb and remain profitable. These fees are not pure profit – the title report, appraisal, and loan processing man hours all need to be paid for somehow. Typically it’s not a problem because HARP allows you to roll closing costs into the new loan, increase your loan amount, and get your refinance done with no out-of-pocket expenses.

So you can either 1) forego the refinance 2) pay the $3,400 in closing costs, or 3) get the second mortgage holder to bend their rules.

My advice is try for #3. Call the second mortgage lender yourself.

I’ve seen cases when the second mortgage holder says no to the lender, but yes to the customer. Try calling them and state that they should be helping you refinance into HARP because it’s lowering your payment and putting them at less risk.

Really there’s no logical reason they should be blocking your refinance. Even with the increased loan amount on the first mortgage, your payment will be smaller. That puts both the first and second mortgage holders in a better spot to be repaid in full. Good luck to you.