For HPML purposes, if the bank uses future advance mortgages on all of its RE Loans, are subsequent loans secured by the same mortgage (in 1st position)tested under the 1st lien APOR test (1.50%) or the subordinate lien test? The scenario would be the customer purchased the residence years ago but would like to cash out on some equity. Rather than completely refinance the loan and save on closing costs, the bank does another note secured by the same lien. It's still a 1st mortgage secured loan it just happens to be the 2nd or more loan.

IMHO any loan secured by that mortgage is in a first lien position. There is no other security instrument filed against the property other than your one mortgage so how can it be in a subordinate lien position regardless of how many loans are secured by it?

Dan's comment is "There is no other security instrument filed against the property other than your one mortgage...

How do you know that there are no other security instruments recorded again the property?

Should we use the "Future Advance Clause" we automatically order a Title Search to determine that no other financial institution recorded an intervening lien against the property.

If another F/I has a written Verification of Loans, completed by your F/I, that states your current outstanding balance is $15,250.00 and years later you try to claim first on $40,000 because of your future advance clause? I bet you don't put the face amount of your mortgage on your loan verifications?

Better check case law in your state. You could end up being in third position on your last funding.