Refinancing My Home - How to Overcome Challenges

by Marian D. in Simi Valley, CA, by Philip and Stephanie, and more...

Ask Kate about refinancing my home and how to overcome challenges in the loan process: Are you an armchair quarterback who thinks homeowners need to toughen up and quit whining about their finances? Think again! Meet Marian with solid credit. Next is Stephanie. After her husband Philip's car accident, she's trying to lower their payment. Lastly meet the homeowner with strong credit scores and tons of equity. Yet none of them can refinance.


Q 1: My refinance is not approvable with rental property income losses on my tax return?

By Marian D. in Simi Valley
Quit guessing! Ask Kate about Your Mortgage

I'm two months into the refi procedure and after being conditionally approved I was just informed by US Bank that my refinance for a rental is not approvable because I show rental income losses on my tax return.

I would like to point out that these are the same tax returns that they have had since day 1 and prior to my conditional approval.

I am an accidental landlord - out of necessity I turned my vacation home into a rental. The income does not cover the old mortgage but it would with the new lower payment so of course I show losses.

My primary residence is also partially a rental as I moved into my guest house when the economy went south which also shows a small loss but don't all rentals show losses (combined the losses equal less than 10% of my annual income)?

My credit is solid, income is solid (even with the losses), 18 years at the same employer. I have twice the amount of the loan in my 401K, a decent savings account and the appraisal came in for $27,000 more than the loan amount. How could this be happening?

I am out nearly $500.00 in fees even though everyone keeps saying there should have not been an appraisal fee and I want to talk to someone. Is there a hotline that I can call?

***zz-portrait-left.shtml*** Ask Kate answers: My refinance is not approvable with rental property income losses on my tax return?

Hi Marian,

This mind-boggling mess mistaken for a mortgage application process often happens for two reasons.

1. Mortgage originators who received little to no training in analyzing tax returns and inputting complex finances into desktop underwriting software.

2. Underwriters who began during no-income-verification eras and never became adept at analyzing tax returns.

If you decide you are going no where fast with this company, ask your accountant for a lender recommendation. CPAs are sometimes asked to explain tax returns during the loan process. So yours might know of lenders comfortable with tax returns.

I can feel your frustration after having supplied sufficient information on day one, only to get a bizarre answer like this down the road.

If you are assuming your paperwork has never been perused, you're probably right. No wonder homeowners get so frustrated with the banks! Add an investment of $500 and it becomes even more painful.

You can find help for resolving and filing complaints at, the State of California Department of Justice, office of the attorney general.

Best wishes,


Q 2: Refinancing my home

By Philip and Stephanie
Ask Kate Empowering Today's Homeowner

Dear Kate: Here is our problem, we need to refinance our home. My husband was in a terrible automobile accident and was out of work for several months due to his injuries.

I contacted my mortgage company and they said they would work with us and lead us to believe they would.

But after months of telling us they were working on a re-modification program for us they have just given us the run around and I feel they were are about to lose our home.

When my husband returned to work we tried to start back making payments, but they would not accept them.

We are not looking for any money, just someone to do a streamline refinance of our current balance which is roughly $53,000. I really hope you can help us, or know someone that can. Thank you.

***zz-portrait-left.shtml*** Ask Kate answers: Refinancing my home

Hi Philip and Stephanie,

Call a free HUD housing counselor today. Please don't delay.

These free counselors have been trained in the Making Home Affordable Programs. They take calls 24 hours a day, 7 days a week to assist homeowners in need.

Before you call, read more about free Making Home Affordable Housing Counselors and the particular paperwork to have ready to get the most benefit from your phone appointment.

I'm not sure of your city but if you check often with my blog for details, you can monitor nearby cities included in the Making Home Affordable face-to-face meetings.

One more thing. Be prepared to be a little pushy if you aren't getting enough attention. The counselors, from what I can tell, are doing their best within the program parameters. But keep this in mind. No one will care more about your family home and your mortgage financing than you.

So be ready with the required paperwork before calling for help. And as I said, be prepared to fight for your home if you aren't getting the help you deserve.

Best wishes,


Q 3: HARP 2 Refinance - Why can't I get a refinance with money in the bank?

Kate, where are the mortgage companies that will refinance people with money in the bank?

I have consistently been told one has to show income and income cannot be from savings, stocks, etc.

My loan originally was owned by Bank of America and was sold to Nationstar. Nationstar would refinance to a HARP - but they wanted almost 3.75% for a 15 year loan and exorbitant closing costs on top of it.

I even have a loan-to-value of less than 17% on a $500,000 home. No late payments and credit rating 800s.

How are these banks and mortgage companies getting away with this? Does the government know what is going on?

***zz-portrait-left.shtml*** Ask Kate answers: HARP 2 Refinance - Why can't I get a refinance with money in the bank?

The banks will get away with this if we don't speak up. For some sectors, the economy is improving. But how long will this improvement take to reach struggling homeowners?

Here's a fact. Homeownership has been the backbone of America since before the Great Depression. That is why the government pitched in after WWII with FHA programs.

So I'd encourage you to write your state and federal elected politicians. In fact, send them a link to this letter.

Let them know about your refinancing struggles. Ask and expect their support.

Go here for more details on contacting your elected representatives in the government. (Scroll down to the bottom of the page in the comment section for 4 easy methods.)

By the way, HARP 2 No-income-Verifier-Refinancing is allowed for underwater mortgages. Ask your reps in Washington DC why it isn't allowed for your low loan-to-value!

Best wishes,


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Possible to Switch Mortgage Lenders?
by: Homeowner

Is it possible to seek a new mortgage with a different lender? Due to some bad choices, my mortgage is high value low. Looking to seek alternative solutions but not sure where to go. Any assistance is appreciated.

Hi, Kate here...

If you are eligible to apply for the Home Affordable Refinance Program (HARP 2), in almost all cases, you are free to shop for a participating lender of your choice.

However if you need to apply for the Home Affordable Modification Program (HAMP), you must go through your lender (or loan servicer). This is because a modification retains the original note while only modifying the existing terms.

On the other hand, a refinance involves fresh money being loaned and produces a new promissory note. So any willing lender can handle this process.

Read more about HARP 2 here and HAMP Tier 2 here.

Best wishes, Kate

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