HARP 2 Refinance and Clueless Loan Servicers

by Greg C. from San Diego, California and by Margaret from Sarasota, Florida

Ask Kate about HARP 2 refinancing with a clueless loan servicer: No one would choose to have their mortgage payments collected by an incompetent servicer. So why try to refinance with one? Greg's mortgage payment has tripled. Just as frustrating are the answers he's getting after paying $600 upfront to begin the refinance process. Ditto for Margaret. Due to multiple servicers, she's having a difficult time finding this simple answer. Does Fannie Mae or Freddie Mac back her mortgage?

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Q 1: HARP 2 Refinance with Mortgage Loan Servicer

By Greg C. from San Diego

Kate, My 1st mortgage payment adjusted this month and almost tripled. Citi currently services my Fannie Mae loan.

I contacted Citi to try and do a streamline refinance. The loan officers are clueless there. I spoke with one person who said, 'I don't know any of the answers. We just have to submit it' after I paid them $600 up front for appraisal and other fees.

I called another Citi retail branch and they gave me completely different information. One said debt-to-income ratios matter. Another said they don't.

One said loan-to-value is not an issue, another said I would not be able to lock the rate until full approval.

Now rates are up .5% from last week. My question is does the person who holds your mortgage have any advantage in underwriting or should I just go somewhere else? If so, do you have any advice on choosing a lender. Thank you

***zz-portrait-left.shtml*** Ask Kate answers: HARP 2 Refinance with Mortgage Loan Servicer

Hi Greg,

No doubt, Citi could stand to invest in a training program.

When the second phase of the HARP program became available in March of 2012, big mortgage companies prepared for the onslaught of loan applications by employing untrained and clueless order takers.

After reading your letter, I'm convinced a year later, there is little improvement. Ugh.

Using Loan Servicers vs Shopping Lenders

Here's the benefit to using a loan servicer. They have the option of manually approving your mortgage vs being restricted to running it through Fannie Mae's or Freddie Mac's underwriting software.

If your credit, debt ratios, amount of savings in the bank, job history, appraised value, or other criteria has an odd twist, a manual approval could save the day.

On the other hand, using the software streamlines an approval and usually results in less paperwork for you. So don't be put off by the thought of using another bank to originate your HARP refinance!

But if you decide to shop for lenders, keep in mind that you could still encounter unreliable answers. Do shop carefully and wear your Buyer-Beware hat at all times. Go here to learn the art of comparing rates, points, and closing costs.

Mortgage Approval and Locking Your Interest Rate

One more thing. When mortgage rates spike, chaos often reigns in lending offices. So monitor the process of your mortgage application and rate lock expiration dates very, very carefully. No one will care more about your loan approval than you.

Best wishes for a more affordable monthly payment,

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Q 2: How to Know Who Owns Your Mortgage for HARP 2 Refinancing

By Margaret from Sarasota, Florida

Kate, I believe our mortgage is either owned or insured by Freddie Mac. How do I know which it is, owned or insured?

Originally it was with Countrywide, then went to Bank of America and they sold it to M&T in November 2011. We want to refi under HARP, have an adjustable presently at 3.25%, and are about 50% under water. Have never been late so far.

If I send a Qualified Written request to the present servicer, they would have to tell me who owns it and whether all the docs I ask for are in the file. What say you? Thanks in advance - Margaret

***zz-portrait-left.shtml*** Ask Kate answers: How to Know Who Owns Your Mortgage for HARP 2 Refinancing

Hi Margaret,

Insure, back, own, purchase, sell, bundle, guarantee... No wonder my dad, a retired banker, told me he had no idea what I did when I owned a mortgage company!

Borrowing against a home is no longer a matter of a handshake over a one page loan application at your local bank.

Nope! There are independent brokers and in-house originators. Banks and mortgage companies. Loan servicers and investors. Fannie Mae and Freddie Mac have a finger in the pie too.

Does Fannie Mae or Freddie Mac Own My Mortgage

But I have good news for you. You can solve the mystery yourself. Go here for more details: How to find out if you have a Fannie Mae or Freddie Mac mortgage.

But the difference between owning and backing your mortgage shouldn't impact the HARP 2 process, just as long as Fannie or Freddie DOES either own or back it! (Insuring and guaranteeing usually relate to FHA, VA, and USDA home loans.)

By the way, your loan servicer should tell you who backs your mortgage. There's no excuse for them to be secretive and to say you are entitled to the information is an understatement.

Getting Documents from Your Loan Servicer

But can you wrangle documents out of your loan servicer? Eventually perhaps. But know that it would be a lengthy process. It is not uncommon for original documents to have been misplaced when mortgages were bundled and sold.

In fact, this led to the infamous robo-signing debacle resulting in the National Mortgage Settlement and Independent Foreclosure Review Agreements.

But back to your documents, if they were recorded, try calling a local title company or look up your county recorder online to see if you can order copies of documents. It might be easier and quicker than relying on the loan servicer.

Best wishes for getting answers,

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Ask Kate about Your Mortgage

Anyone can ask Kate a question or add a comment. (To comment, look for the link at the bottom of this page.)

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