I agree with you. To me sounds like the broker had no idea what they are doing. Refinancing the first position would have been for the best for everyone involved, the merchant, the broker, and both funders. And with rush of new money into stacking companies, there are quite a few who have no idea what they are doing. It seems like some do basically no underwriting, and just assume if it passed the first position funders underwriting then it must be good to stack on. We actually had a company decline a deal saying they don't do first positions lol

The only argument is that stacking eliminates paying interest on interest, as done in a traditional refi. However in my opinion the much higher rate and much shorter term eliminates any benefit of saving interest on interest