FMV is 550k. 

First is 5.378 on a balance of 138k with Wells Fargo

Second is interest only HELOC and near cap (142k) now (holer in due couse ) with Chase.

As it is possible to refi the first at 3.856 and save the owner ~600/mo,

Q: would the second subordinate the I/O heloc, given current market conditions?

Chase will allow 65% CLTV - the first cannot be an IO loan, must be P&I - they will subordinate if borrower qualifies - they are taking about 6 - 7 weeks for subordination agreements - and they will want to see, the full application, the appraisal, the commitment to lend for the new first loan - they have been known to reduce the current HELOC - or even Freeze it if the appraisal and or dti is not in their overlays.

Nice feedback; very complete :)  thanks

Chase will also want a copy of the preliminary title. 

I just received a subordination yesterday that took about 5 weeks to process.  Chase asked my borrower to lower the max credit on the HELOC to $250k ... they said that is now thier max HELOC amount, and needed to bring this inline with thier current guidelines.

I've recently completed 2 subordinations w/ Chase.  In neither case did we send an appraisal.  They're checklist is clear, appraisal is required for cash out refis and MAY be requested on non cash out refis at their discretion.  My CLTVs were 71 and 75%, both rate and term refis.  35-40 days in both cases. 

I can email you checklist if you like.  Not seeing how to attach it here. 

Good Luck

Tony