HARP, HAMP, HOPELESS

Turned down for a mortgage refinance or afraid you won’t be approved? Are you angry and frustrated with your mortgage lender? Why is it so difficult to get a better rate? Why does the lender say that I don’t qualify for a LOWER payment when I am already paying my current HIGHER payment?

I am a mortgage Broker here in PA and I share your frustration and can maybe offer some insight and even a little hope about how it works from the inside. I will save the details about Short-sales and Foreclosures for a future post but just note these are not good for lenders… loans gone bad! I think we can all agree that if the lender lowers you mortgage payment then regardless of the property equity you would be better able to make your mortgage payment and stay current. Many of the new HARP type programs are designed to help homeowners left out of the normal products that require substantial property equity or at least not have your home value be less than your current mortgage balance. Great Idea but they fall short on the execution, meaning that many questions of loan structure, lender participation, pricing and the guidelines for underwriting have been left up to the lenders. The result is that many lenders are not participating and many have placed restrictions or overlays on top of the standard rules like; Credit scores,  income and property ratios resulting in many rejected loans that may be approved at a different lender without the overlays. WHY? Lenders are about risk and many of these loans have past a certain point of liability to the lender so a new loan even though the payment is lower for you it will increase the lenders direct liability if the loan goes bad.

What to Do: Talk with your existing servicer and see what they can do for you (many say you don’t qualify because they don’t offer a program)and then talk to a Broker with a good reputation and compare prices and products… a broker will have access to many lenders and should be able to direct you to a lender that is favorable to your particular circumstance.  It is always smart to get a second opinion.

By Bill Frantz at Norstar Mortgage 6-18-2012

 

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