Three times in the last month, I’ve applied for HARP 2 through my current lender, Bank of America, and received 3 outcomes.
Today I heard that HARP 2 was not available through Bank of America until December 1st, 2011. So, I called back to see if, now that HARP 2 was available, if I would get a more appropriate outcome.
On my third attempt, Bank of America told me that as of December 13 (today’s date), they have not released the HARP 2 program, and that they “do not have a date as to when it was going to show up.”
In all 3 refinance attempts I specified that I wanted to refinance through the new HARP 2 program, and none of the 8 or more people I spoke with mentioned that HARP 2 had not been released. According to the most recent representative I spoke with, each attempt to refinance through Bank of America would have been through the original HARP program. But each attempt yielded dramatically different results.
3 Different Outcomes Breakdown
Here’s the breakdown of the 3 attempts, starting with my current scenario, for reference, all using 30 year fixed as a consistent baseline.
Current 1st Mortgage / 6%
$ 988 Principal
$ 300 Escrow
$1288 Total monthly payment
1st Attempt — Not Approved
Early November, 2011
I was not approved to refinance through the HARP program at Bank of America, my current loan holder.
2nd Attempt — 5.375%
November 21, 2011
1. I qualify for the loan at 5.375, 30 year fixed, but the percentage is not that great, they say, because of my 2nd mortgage.
2. While the appraisal fee of $425 not required, there are still over $3000 in closing costs.
3. It will take approximately 2 years to recoup the refinance costs.
$ 382 1/4 of a discount point
$1175 Bank of America’s total fee
$1567 3rd party fees
$3124 Total closing costs
$ 460 Out of pocket cost
$ 856 Principal
$ 264 Escrow
$1120 Total monthly payment
$ 168 Total monthly savings
3rd Attempt — 4.5%
December 13, 2011
1. I qualify for the loan at 4.5%, 30 year fixed.
2. Closing costs are $691 less than the second attempt.
3. It will take 4.6 months to recoup the refinance costs.
Discount points are not mentioned in the conversation.
$191 Discount Points
$866 All lender fees (Bank of America’s total fee)
$1567 3rd party fees
$2433 Total closing costs
$ 0 Out of pocket cost
$ 775 Principal
$ 264 Escrow
$1040 Total monthly payment
$ 248 Total monthly savings
Loan Amount Breakdown
$148,484 Current total loan amount
$1,380 Current escrow balance
$153,000 New total loan amount
$1887 New escrow balance
$4516 Total loan increase
The third attempt looks like what I should have been offered all along. I’m happy to finally have received a more appropriate interest rate, but am more confused than ever about actually Making Sense of HARP.
Bank of America holds my first mortgage for $148,000 at 6%. US Bank holds my second mortgage for $44,000 at 8.49%.
If you’ve read past entries, you’ll know that I refinanced with US Bank 5 years ago at that rate because they offered me a loan that would allow me to refinance through US Bank when interest rates dropped, without closing costs. Then the economy crashed and I was stuck with that rate, because I had no equity and they said “No” on the refinance when rates dropped. Adjusting that loan is imperative, but it may not be possible, so I continue to focus on the first loan via the HARP program.
At the end of November, Bank of America offered me 5.375% interest (currently at 6%) with $3000 in closing costs to refinance under the new HARP program, which did not fit with the 4-4.5% average interest rates we’ve all been hearing about.
I went to US Bank to see what they would offer on either my first or second mortgage.
Interest Rates Over 4.5% Should Be Investigated
US Bank indicated that there was absolutely nothing they could do about the 8.49% loan I currently have with them on my second mortgage. That is the standard response I’ve gotten over the last 5 years. But they did think that Bank of America was in error for the interest rate they offered, possibly due to not having received the new guidelines. However, Bank of America said they had received them, and 2 weeks before the guidelines were distributed, Bank of America turned down my refinance. The lender at US Bank said that he thought he could get me 4-4.5%.
Appraisal Needed When Refinancing With Another Lender
I could get a lower interest rate with US Bank, but the lender told me that I would need an appraisal at the cost of $450. I reminded him that with HARP 2, an appraisal is no longer needed. He pointed out that the appraisal process is waived only if the loan-holder refinances with the original lender.
In the official HARP Q & A document, also available for PDF download in HARP Basics, appraisal is contingent on AVM (automated valuation model), which is extracted from Zillow.com or your home’s Estimatesd Tax Value. (And possibly other sources that I have yet to learn about.)
Cap or No Cap?
The US Bank lender also told me that there is a 105% loan-to-value restriction in place in order to qualify with another lender.
If my appraisal come back at $145,000, I would be approved for a $152,000 loan.
It’s unlikely the appraisal would come back that high, but that is approximately the minimum appraisal amount I would need in order to cover my first loan.
If my appraisal came back at $135,000, I would only be approved for a $141,000 loan: $8,000 less than I would need.
The lender I spoke with at US Bank discouraged me from doing the appraisal, and told me I should return to Bank of American and reattempt with a different person there to try to get a better rate.
Official HARP Fact Sheet and US Bank Qualifications Discrepancy
Below is an excerpt from the HARP Fact Sheet, available for PDF download in the HARP Basics section of this blog. The Fact Sheet indicates that the program will continue to be available for loans with LTVs above 80%. Where did the 105% LTV come from that US Bank quoted me?
What I discovered was that the 105% LTV is only a requirement when the new loan is an ARM. Was the US Bank lender attempting to put me in an ARM?
First Equity Mortage, and my loan, was sold to Countrywide in 2008
In early 2008, my primary loan at Countrywide was bought by Bank of America.
Read CJR’s article about “Bank of America’s Disastrous Countrywide Deal.” The “dumb” money squandered tens of billions of dollars on Angelo Mozilo’s predatory lender.
I’m Still Making Payments Every Month, So Why Doesn’t Anyone Want My Money Anymore?
Couldn’t one of my mortgage holders take over the other mortgage holder’s loans and offer me the lower percentage rate?
I get it, I don’t have any equity because my house is worth less than when I bought it. But I never had equity in the first place, and now that the banks are supposed to be helping us get back on top of things, it’s harder than ever to get anyone to do anything.
CNN Money reported that over 100 banks received over 200 billion dollars, allegedly to promote new lending. I’m still stuck with outrageous mortgage payments while Jamie Dimon, JPMorgan’s CEO who ushered US Bank through the financial crisis, just got a $19 million dollar raise.
More recently, in November of 2011, Bloomberg News reported the following:
The central bank provided emergency loans, asset purchases and other aid totaling roughly $7.8 trillion during a two-year period ending in March 2009, easily the largest component of the government efforts to bulwark the financial system.
I have loans at percentages that are no longer appropriate for the market, with two different banks* that received upper-end amounts of bail out money. How is it any more of a risk to them to refinance me? I’m already a risk. I already have the loan, so lower the interest rate so that I am less of a risk because I am more likely to continue to sustain my payments over time. Isn’t that what the bail out money was for?
And Jamie Dimon isn’t the only one giving himself a nice fat raise, banks are making less, while bonuses are being handed out by the millions. *Bail Out Money Received by the Two Banks Holding My Mortgages Bank of America: $15,000,000,000 U.S. Bancorp (US Bank): $6,599,000,000