HARP Mortgage Refinance Turned Down
by Dave in Texas, Amy in Florida, and Patricia in Arizona
Ask Kate why the HARP mortgage refinance was turned down: Dave tells me the bank's refusal to refinance his son's mortgage is unreasonable, inexcusable, rotten, and dirty treatment. Amy followed the lender's steps yet their HARP application was still declined. Patricia needs help in this frustrating quest because her lender is ignoring her.
Question 1: Mortgage Refinance Request Rejected By Dave R from Texas
Kate, My son had a 30 year 6.25% fixed interest rate loan for about $100K on his house for about three years. He has always paid on time, and also often paid extra on the principal to reduce it down to about $80K today. Now he requested to refinance with them at current rates.
They refuse for one reason - that is, he recently was laid off from his job and is unemployed. If he were employed, they would refinance with no problem. He has not been able to find a job (been about 7 months) but has made all his required payments on time and will continue to do so.
I can understand they would reject him for a new loan - but their refusal to refinance his current loan seems to me to be very unreasonable, inexcusable, rotten and dirty treatment. Is there anything he can do about this?
Ask Kate answers: Mortgage Refinance Request Rejected
You've heard people say "It's not personal, it's just business".
And if you're like me, you detest that saying.
Unfortunately, that is how banks think. Cold.
In mainstream lending, HARP 2.0 or traditional, to get the best rates and fees, income is verified when a mortgage is refinanced. At the very least, most program guidelines will require a verbal verification of employment.
So in spite of having been on time even while he is unemployed, the lender has no way to verify your son's ongoing financial ability to make his monthly house payments until he gets a job.
But it is no small feat that your son reduced his principal by 20% in the first 3 years of his term. However, that $20,000 would come in handy about right now for making mortgage payments.
I have a 6-step plan for getting out of debt and paying off a house that takes a different approach. For details, go to Focus on Finance
Question 2: HARP Application Declined By Amy from Pompano Beach, FL
Kate, Even though we've never missed or been late with a mortgage payment, due to loss of employment for both my husband and myself last June within weeks of one another, we can no longer afford our mortgage payments.
In addition, our home is underwater through no fault of our own.
We followed the steps as per our lender and our HARP application was declined even though we fully qualify under the program. What should our next step be?
Ask Kate answers: HARP Application Declined
I created a special edition of Making Home Affordable Plans
with a bird's eye view of your options.
Be sure to familiarize yourself with the programs so you know what to ask when you speak next with another lender or your servicer.
Here are a couple of specific options for you. Follow these links to more information on my website:
- Shop for another HARP 2 lender because there are differences among them. See Why are HARP 2.0 Mortgage Lenders Inconsistent.
- Investigate HAMP with your loan servicer. For more details, go to Home Affordable Mortgage Modification Plan.
- Less palatable but developed out of need are the Making Home Affordable Foreclosure Alternatives (HAFA). Go to Short Sale and other Foreclosure Alternatives to see if you are interested in pursuing these with your loan servicer.
Best wishes for getting an affordable mortgage,
Question 3: Being Ignored by HARP Lender By Patricia from Buckeye, Arizona
Kate, My husband and I are retired senior citizens with excellent credit, never missed or late with mortgage, 770 FICO credit score, low balance on one credit card ($2,750), $300 monthly car payment, and enough monthly income to get by comfortably.
Our mortgage balance is $104,000 and LTV right now 150%. Our interest rate is 5.7% and would like to take advantage of the low rates to lower our mortgage payment.
Two months ago we met with a loan officer and gave her all our information to get started. In the last 2 months, I have called her at least 3 times, emailed 2 times with no responses or call backs. A few days ago she finally did respond to my last email with the announcement that due to a family emergency she would be out of her office until the end of May.
Our loan application has never been sent to us and nothing has been even started. She did refer her clients to another loan officer and emailed him right away explaining the situation and asked him to call us.
That was 5 days ago and now feel that they are just hoping we go away as it seems not enough money will be made on people like us who have been responsible, were careful with spending, but feel it is our turn to be rewarded.
We know that another lender will have tighter restrictions and possibly higher costs because they aren't our servicer, but need some information or help in this frustrating quest to just make our mortgage payment lower. Thanks, Patricia
Ask Kate answers: Being Ignored by HARP Lender
So here's what happened. One inattentive loan officer passed you off to another. Unless you want to take the wait-and-see approach, it's time to rethink your strategy.
Call back the bank department and start the hunt for their supervisor. Ask for a realistic timetable and to be switched to their best mortgage representative who will be more attentive since you are a valued customer.
I know this works. Once a Realtor walked into the bank and announced to the receptionist in a very loud voice, "I need your best loan officer for my home buyer
". The receptionist got right up out of her chair and ushered the real estate agent straight over to me!
Or shop and compare other mortgage companies. See if your hunch is right about the bank offering you the best rates and fees. Maybe it's not. Wouldn't you love to be wrong this time!
Follow this link to another page on my website for ways to compare mortgage rates, closing costs, and lender procedures
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