VAR’s Jay DeBoer, Vice President of Law and Policy, tells Virginia Realtors® and homeowners why the recordation tax on re-fis should be eliminated:
First, it has become extraordinarily difficult to determine who actually owns your mortgage. The days are mostly gone of the friendly neighborhood bank making a loan and holding the note for 30 years. Lending institutions sell notes freely, transferring them electronically and sometimes the original lender continues to collect the payments as a “servicer.” When the homeowner is asked whether he is “refinancing with the same lender,” the honest answer is usually “I don’t know.”
Second, mortgage interest rates are extremely low right now, and those who have older loans with higher interest rates would generally save money by refinancing. But lenders have become far more restrictive in approving loans. Having an extra $700 to $1,000 on hand, saved from not having to pay recordation taxes a second time, might mean the difference between a loan refinance approval for a homeowner who is struggling, and a rejection.