I get a lot of emails from people who are looking for some help with their mortgage needs from the articles I write here and on my mortgage blog. I just heard back from a reader today who I’ve been having an email dialogue with since March. He contacted me after reading a post I had written with the subject line: “Need Your Help…Making Home Affordable Program”. I asked him today if I could share the emails so our readers can see what it has been like for this homeowner trying to get a HARP refi.
March 8, 2009
I read your post and I’m very excited. I am a novice when it comes to mortgage so please help me understand this. I bought my house 4 years ago and the values have dropped. I have two mortgages 80% and 20% with the same lender. I am currently paying around 42% of my gross income.
My understanding is that only the first mortgage will be lowered down? Both of my mortgages are with the same lender [very large bank]. I will call them on Monday but need to hear from you as I trust your opinion more. What will happen to my other 20% loan, it’s at 7%. Please help….
I provide the toll free number and contact information for his bank. With two mortgages at 100% or higher loan to value, it’s pretty challenging to help anyone. Second mortgages have become more difficult than ever–even with short sale negotiations. I suggested that he contact his bank/mortgage servicer since they have both mortgages with hopes they would maybe modify his loan if it did not qualify for the refi.
March 9, 2009
Thank you for your support, it means a lot to me. I was on hold with the bank for no avail. I will try again tomorrow. I guess they’re receiving too many calls these days.
I replied: I’m sure they’re inundated…they did a lot of second mortgage/home equity loans up to 100% loan-to-value.
March 10, 2009
I was able to get hold of them this morning at 5:00 a.m. (they open at 8 EST). The good news is that my first mortgage is with Fannie Mae…they would not discuss options with me until I fill out their paperwork. Thanks for all of your help.
I told him I was glad and asked him to keep me informed of his progress. He immediately replied:
Sure, I will keep you posted. I will be submitting my application by this Friday 🙂
I didn’t hear from him again until today.
Hi. I hope everything is going well for you. I just wanted to update you regarding my application. Well, the bank denied my application citing that my monthly payments on my first, including insurance, property taxes and HOA is not 37% of my monthly gross income. When I argued that the program says 31%, their rebuttal is that they us a sliding scale based on income. I’m not sure if this is what the program guidelines say or is it just something the bank came up with on their own. I just wanted to thank you for your help through this effort.
There are a lot of stats thrown to the press about how great HARP is and how many people have been helped. There are many who have not been so lucky and have had to go through hoops to find out.
Has any home owner had success dealing with their second mortgage with a Home Affordable refinance or loan mod program?
I know two people who are trying for a refi under the program. One still doesn’t have an answer after a few months (3 at this point), the other didn’t even know about the program till last month and just started the process. From what I can see, the experience the reader you quote has gone through is seems all too typical. If either of the people I know do successfully get a loan mod, I’ll let you know.
Gene, please do… I’m afraid that a majority of the “good news” stats we hear of thru the media of how many saved home owners there are via the refi’s or loan mods…. are those who have been “cherry picked” by the lenders.
Folks with a second mortgage and/or lender paid mortgage insurance (LPMI) are in a tough spot.
I was told by B of A that I did not qualify for the HARP program due to lender paid MI on my account. Does anyone know if this would also disqualify me from the HAMP program?
Paul, since I don’t do loan mods, I’m not sure. It’s worth giving it a try–please let us know what you find out.
Rhonda I know you will not recommend this but here is the facts:
Many investor friends and home owners I know (in excess of 10) have not paid on their HeLoc’s for over a year now. These home owners are all upside down on their 1st. 4 of the the owners of these helocs got deals to settle. The ones I saw had balances 30-55k and they all settled for 8k-15k on the balances. They were all with WFC.
The remaining 10 have figured whats the point. The He-loc lender will not foreclose and they feel fine with that 2nd sitting on title for years to come. They state if property values rise, and they get even, they will gladly sell the home and then the 2nd will get paid.
They are all now in 1 stage of another of not paying their Mtg’s with Wachovia, WFC, BAC, and the defunct Indymac. Its a fascinating game of endless faxes and phone calls. Only 3 thus far have gotten a Loan Mod but the others report in the last month things have really stepped up. The ones that closed their loan mod report to me they got 5%-5.5% and they received forgiveness of accrued, outstanding, and not capitalized interest. In addition to that they were able to not pay for 10 months on their Mtg and now have emergency cash available. The 2nd’s in all circumstances have not been paid at all and they are all with different banks then the 1st. Its more then obvious the Bank in 1st could care less about worthless 2nd lien.
Its an outright crime. So many others I know have been turned down due to low appraisals and I assure you when this hits the mainstream media of Dateline, PrimeTime, 60 Minutes it will start the masses following the same behavior and we will see our double dip in the economy.
I hope I’m wrong but one thing for sure. With no Mtg Cramdown all these homes are coming back. Its not a question of if…just when. We have bandaides on these arterial wounds.
Ray, I think we’re far from being done with foreclosures. There’s still no real help for those with jumbo mortgages, ARMs are still resetting…appraisals are coming in lower and underwriting guidelines are getting tougher. Really–if lenders wanted to help home owners they would go back to “no appraisals” or streamline refi’s…if the borrower qualifes for a lower rate and the only thing holding back reducing the rate is an appraisal??? why require one? Next week on Tuesday, FHA is making it more difficult with their streamlined refi’s–you can no longer do an fha streamline refi w/out an appraisal if you want to roll closing costs into the transaction. The timing is terrible. Add to this how many Americans are unemployed or underemployed…I’m afraid we have a ways to go.
I also heard from one of my clients who I had contacted to see if they were interested in an FHA streamlined refi w/no appraisal (while it’s still an attractive product) and he told me he contacted his mortgage servicer (Chase) hoping for a loan mod. They told him that he did not qualify for a loan mod and suggested a streamlined refi…Chase told him they are too busy doing loan mods to do his refi and referred him to a different lender!
Absolutely disgusting. Yes, I agree the foreclosures will go on for a decade along with short sales at this rate. Home appreciation? You must be kidding me….
http://www.cnbc.com/id/33908889
Rhonda I know you will not recommend this but here is the facts:
Many investor friends and home owners I know (in excess of 10) have not paid on their HeLoc’s for over a year now. These home owners are all upside down on their 1st. 4 of the the owners of these helocs got deals to settle. The ones I saw had balances 30-55k and they all settled for 8k-15k on the balances. They were all with WFC.
The remaining 10 have figured whats the point. The He-loc lender will not foreclose and they feel fine with that 2nd sitting on title for years to come. They state if property values rise, and they get even, they will gladly sell the home and then the 2nd will get paid.
They are all now in 1 stage of another of not paying their Mtg’s with Wachovia, WFC, BAC, and the defunct Indymac. Its a fascinating game of endless faxes and phone calls. Only 3 thus far have gotten a Loan Mod but the others report in the last month things have really stepped up. The ones that closed their loan mod report to me they got 5%-5.5% and they received forgiveness of accrued, outstanding, and not capitalized interest. In addition to that they were able to not pay for 10 months on their Mtg and now have emergency cash available. The 2nd’s in all circumstances have not been paid at all and they are all with different banks then the 1st. Its more then obvious the Bank in 1st could care less about worthless 2nd lien.
Its an outright crime. So many others I know have been turned down due to low appraisals and I assure you when this hits the mainstream media of Dateline, PrimeTime, 60 Minutes it will start the masses following the same behavior and we will see our double dip in the economy.
I hope I’m wrong but one thing for sure. With no Mtg Cramdown all these homes are coming back. Its not a question of if…just when. We have bandaides on these arterial wounds.
A lot of this stuff isn’t rocket science. But of course, the people that really know what is going on (those of us on the front lines) aren’t really involved in the development of these programs. Any broker with six months of experience predicted 2nd mortgages and PMI were going to hamper any real relief with these programs.
Unfortunately, short of a dictator taking control to force solutions and make the banks eat crow immediately, I don’t think much is going to happen that is going to fix anything.
We still have a ways to go.
I’m sorry but I have no sympathy for people that used 100% financing and ARMS and now find themselves underwater and/or unable to make payments. They drove up the price of real estate for the resposnible buyers such as myself who believe in living within our means and meeting our obligations. Now I am saddled with a mortgage for more than I would have had to pay if these idiots hadn’t driven up real estate prices. Now I have to meet my obligations while taxpayers have to bail out these idiots. ENOUGH ALREADY.
SBOD I don’t think people who obtained 100% financing or used ARMS are deadbeats, as implied in your handle.
It’s hard to say how many more buyers were added to markets with this type of finanicing–many of them would have qualified for FHA loans instead.
I believe housing prices were more impacted more by stated income and NIV loans when a buyer would dramatically inflate their incomes to buy any home they wanted. I’ve had people contact me (not my original client–I did not do “over-stated income loans
SBOD you are way off the mark in pointing blame. The homeowners were not to blame. I think you need to educate yourself with this. Watch it a few times. Its an outstanding video that clarifies what happened and who you should point your finger at.
http://www.500realty.net/crisisofcreditvideo.php
Consumers who take out any debt (mortgages, car loans, etc) beyond what they can afford are responsible for their situation. It’s different if someone has lost their job or have had their incomes cut back… but when you freely spend more than you earn you’re asking for financial trouble.
Just because the bank gives you a credit card with a $20k limit doesn’t mean that you have to max out the card… same thing is true with your mortgage–just because you’re approved to purchase a $500,000 house, doesn’t mean that you should.
It seems like personal financial accountability flew out the window during the “subprime years”. I understand SBOD’s frustration regarding that point.
I’ve this a lot — it’s not the mortgage product or program that created the issues–it was how they were abused and used in the wrong applications.
“Consumers who take out any debt (mortgages, car loans, etc) beyond what they can afford are responsible for their situation.” Yes and No Rhonda.
The problem is this. Remember I’m from Nevada where the carnage of 80% declines is commonplace. We have 1000’s of homeowners who just bought at the wrong time and they got standard 30 year loans at 6-6.5% interest full doc . However, we live in a mobile society and job, divorce, health, and hundreds of other reasons must force a sale in 2009-2015. These properties are near worthless now and the sellers do NOT have 60k-500k to cover the shortage. Sure the speculators who took the World Savings Pick-a-pay or the Wa Mu 40 year Amort 4 payment option arm added to the carnage but the homes are long gone in foreclosure. The investors let those homes go long ago.
What we are left with is a tremendous amount of real people who made real honest decisions and many are faced with the decision they never thought they would have to make because THEY MUST MOVE! Its always protection of the family unit first and I support all the decisions these familes MUST make. They simply purchased at the wrong time in history that will be documented for decades and now they must move.
Ray, in my comment I did say that it is different for those who have lost their jobs or incomes–yet they have some responsibility as well with terrible unforeseen circumstances.
The buyer who’s trying to get approved just based on one income instead of pushing it to the max with both (if there’s a couple buying together) is rare. Most consumers live well beyond their means and I think that is their choice–their responsibility.
Banks are merely dealing credit to consumers not much differently than a drug dealer to a crack addict. It is up to the consumer to “just say no”.
I just come from a different world where I know so many people who did everything right and for nearly a year now cannot and will not be able to get their homes sold. Selling a home now is a difficult task when faced with the foreclosures and short sales that will continue for many years to come. Are they at fault?..Yes…However, with a very large asterik by their inevitable foreclosure/short sale.
The investors are long gone from these investments and are now back active at the auctions every weekend all wrapped up in their new LLC’s. They are doing very very well. I know this for a fact.
The loan mods will continue for so very long but what we now will enter is the phase of utter disgust by homeowners who did not buy during this corrupt time and when they see that their next door neighbor just got 5% fixed, with a free refi, debt forgiveness, (cram down?), the anger will increase and I assure everyone it will be documented on Mass Media. When the masses realize they will see no home appreciation for a very long time, remain underwater on THEIR loan, unable to sell unless they choose short sale, we will have our next leg down.
We have seen nothing yet and I personally greatly diminish the blame on the homeowner. They just never knew, when they signed, they would not be able to sell.
I’m not talking about buyers not having a crystal ball to know where their home values would be in the future. I’m talking about buyers/borrowers who obtained mortgages with payments they could not make–KNOWING they could not make them (stated income/niv).
When the consumer sees the proposed mortgage payment is the same (or more) as what they clear on payday–what the heck were they thinking? I turned away many buyers like this (probably lost a few RE agents in the process) and I’m sure they didn’t have to go far to find a mortgage originator all too happy to put them in a home they couldn’t afford BACK THEN (even before their values declined).
I feel bad for them–they made a very terrible financial decision–but it was theirs to make. No one had a gun to their head.
Rhonda…I recommend that you and your readers, read this article…it explains alot on how HAMP is not being used against homeowners to NOT modify loans..
http://www.associatedcontent.com/article/2381656/why_obamas_home_affordability_program.html?cat=3
I liked the line that some guy paid more for a property than it was worth because some one else drove up the prices. What a laugh.
Debt instruments are now the back bone of the American economy. There is no more better mouse trap than getting you to pay twice the price for something with 0% interest.
I think you will find you could have paid less for a house if you just waited, or looked with a good agent, did some due diligence about the value of Real Estate.
OK, and what about those people who took the money. Who would have thought in 2007 that we would have a global economic melt down? Housing correction, sure, you betcha, but global economic melt down was never in my vocabulary.
I think I’m a good example. I’ve always made money. If I ever ran out of money I would do a Real Estate transaction for myself or investor and get more money. There is always money, there is money out there today, lots of money.
Then one day in 2007 the money just stops. Fortunately for me I know how to work for a living, but I know a lot of people in the real estate business who are watching a life time of work slip away. We are talking good people who did what they could to help rather than just sell. sell, sell in the run up years.
There are a lot of people who, with good intentions, lost a lot of business that they need to recover from.
My immigration attorney friend built a law firm from scratch, has sixteen associates, and now people would rather be deported than stay here. Another friend does cancer research and has to cut back staff. I have a long list of people who have invested in lives that are now in jeopardy.
So making accusations that the government shouldn’t bail out from what was certainly the results of an unregulated banking system is just wrong. Banks need to be brought into line and solve the problems they created.
Well said, David. I look at this more as a credit crisis…largely created by the banks making it far too easy for consumers to make bad decisions with their debts.
I just heard somewhere (need to do more research) that the Fed is going to require consumers have over-draft protection on their checking accounts–just want the consumer doesn’t need–to be trained it’s okay to write checks for more than what they have in their accounts, be hit with fees and have the shortage of funds drawn against a credit card from the bank attached to their account at 28% interest. Nice.
Rhonda thats well understood and obvious. But, what about all the loans you did to perfectly conforming buyers the last 4 years and all the homes I sold to my clients. These people cannot sell their properties and some of them need to. Its obvious these Buyers were at fault for buying. Were you at fault for doing the loan? Me for assisting in the purchase?
You, me, and our Buyers were placed on a corrupt playing field that we will be paying for as a Nation for at LEAST a decade. Many thousands of Buyers here in the NW are as much to blame as you and I.
Ray, I’m not saying that people who used conforming mortgages and who actually qualified for their mortgages are at fault for buying. Where have I said that?
People who put 20% or more down on their homes lost more than those who put 0 down.
I liked the line that some guy paid more for a property than it was worth because some one else drove up the prices. What a laugh.
Debt instruments are now the back bone of the American economy. There is no more better mouse trap than getting you to pay twice the price for something with 0% interest.
I think you will find you could have paid less for a house if you just waited, or looked with a good agent, did some due diligence about the value of Real Estate.
OK, and what about those people who took the money. Who would have thought in 2007 that we would have a global economic melt down? Housing correction, sure, you betcha, but global economic melt down was never in my vocabulary.
I think I’m a good example. I’ve always made money. If I ever ran out of money I would do a Real Estate transaction for myself or investor and get more money. There is always money, there is money out there today, lots of money.
Then one day in 2007 the money just stops. Fortunately for me I know how to work for a living, but I know a lot of people in the real estate business who are watching a life time of work slip away. We are talking good people who did what they could to help rather than just sell. sell, sell in the run up years.
There are a lot of people who, with good intentions, lost a lot of business that they need to recover from.
My immigration attorney friend built a law firm from scratch, has sixteen associates, and now people would rather be deported than stay here. Another friend does cancer research and has to cut back staff. I have a long list of people who have invested in lives that are now in jeopardy.
So making accusations that the government shouldn’t bail out from what was certainly the results of an unregulated banking system is just wrong. Banks need to be brought into line and solve the problems they created.
Well said, David. I look at this more as a credit crisis…largely created by the banks making it far too easy for consumers to make bad decisions with their debts.
I just heard somewhere (need to do more research) that the Fed is going to require consumers have over-draft protection on their checking accounts–just want the consumer doesn’t need–to be trained it’s okay to write checks for more than what they have in their accounts, be hit with fees and have the shortage of funds drawn against a credit card from the bank attached to their account at 28% interest. Nice.
“People who put 20% or more down on their homes lost more than those who put 0 down.”
Well that is a given. I’m just an advocate for the families.
I could care less if they put 0% down, 3% down, or 20% down. The Buyers did in fact “qualify” at a specific time in history. They qualified because of a corrupt wall street. So I say enough of the talk like the STOPBAILINGOUTDEADBEATS type script.
The housing crisis began on Sept 11 with Alan Greenspan and both you, I, and millions of homeowners just simply lived our lives. The term “deadbeats” displays a complete lack of understanding of what occurred.
Ray, in your 20+ years in real estate, have you ever been employed in the mortgage industry?
“People who put 20% or more down on their homes lost more than those who put 0 down.”
Well that is a given. I’m just an advocate for the families.
I could care less if they put 0% down, 3% down, or 20% down. The Buyers did in fact “qualify” at a specific time in history. They qualified because of a corrupt wall street. So I say enough of the talk like the STOPBAILINGOUTDEADBEATS type script.
The housing crisis began on Sept 11 with Alan Greenspan and both you, I, and millions of homeowners just simply lived our lives. The term “deadbeats” displays a complete lack of understanding of what occurred.
The over draft protection was in response largely to the Bank of America change for savings plan, where they would deposit odd amounts, the change, from a purchase into a savings account. If a customer wasn’t paying attention and most weren’t, that would cause over drafts to accounts. They are settling that out now.
The second part of that was the report that banks generated $25 to $35 billion dollars in over drafts from using debit cards.
For me, at US Bank, my over draft limit is $1K and an over draft fee is $4, or none at all if I transfer more funds. In my case I have multiple accounts and transfer between them as needed.
I’d like to expand on banking and mortgages though.
In my own defense of my business model, we take properties that are trashed, and make them livable again. People accuse me, as the deadbeat commenter did, of running up prices. I actually lower selling prices in may respects. My end product has always sold for a reasonable price. I’m not greedy and just want to get servicing costs off my books as quickly as possible.
More importantly, if I can buy for a discount anyone can. If the deadbeat commenter had attended any of my talks in my twenty years of giving them the commenter would know you never pay retail.
I have never been involved in a multiple offer situation. As soon as I hear an agent will be reviewing offers it’s a dead deal. Anyone with half a brain should have been able to figure that one out.
Properties have a value based on rental income or salability, like view or water front. Every bank knows that. The reason banks lent more than value was because people would pay it. I do think it was every bodies responsibility to point out what the value of property, housing units, is.
The over draft protection was in response largely to the Bank of America change for savings plan, where they would deposit odd amounts, the change, from a purchase into a savings account. If a customer wasn’t paying attention and most weren’t, that would cause over drafts to accounts. They are settling that out now.
The second part of that was the report that banks generated $25 to $35 billion dollars in over drafts from using debit cards.
For me, at US Bank, my over draft limit is $1K and an over draft fee is $4, or none at all if I transfer more funds. In my case I have multiple accounts and transfer between them as needed.
I’d like to expand on banking and mortgages though.
In my own defense of my business model, we take properties that are trashed, and make them livable again. People accuse me, as the deadbeat commenter did, of running up prices. I actually lower selling prices in may respects. My end product has always sold for a reasonable price. I’m not greedy and just want to get servicing costs off my books as quickly as possible.
More importantly, if I can buy for a discount anyone can. If the deadbeat commenter had attended any of my talks in my twenty years of giving them the commenter would know you never pay retail.
I have never been involved in a multiple offer situation. As soon as I hear an agent will be reviewing offers it’s a dead deal. Anyone with half a brain should have been able to figure that one out.
Properties have a value based on rental income or salability, like view or water front. Every bank knows that. The reason banks lent more than value was because people would pay it. I do think it was every bodies responsibility to point out what the value of property, housing units, is.
I have never been a Mtg Rep but many of my friends remain in the industry.
But, in the 20+ years our offices have been in the same offices of National City and Washington Financial Group. I sat 3 feet away from at least 50 Mtg Reps over the last 10 years. In essence I know how the rules of the game and how it is/was played. I know more about the bogust lies of employment, inflated appraisals, investor v. owner occupied lies , cash diversions prior to close, he-loc straps, and most likely things you have never seen occurring here in the PNW during the run-up in Nevada and Arizona.
Yes, I know homeowners lied and many should never be in a home. The lies were facilitated by the American dream of home ownership and how everyone should own a home.
So please educate me where I’m mistaken.
Ray, there is a huge difference between having friends or sitting by people in mortgage vs being in the trenches. I was in the title/escrow biz for 14 years before becoming a mortgage originator and had many friends in the mortgage industry–I was stunned at the difference between what I thought I knew and what was reality.
We sent 3 of our Agents for Mtg training to initiate the opening of 500 Mtg. They are done Dec 12. I discussed with the partners about sending me as well but there is nobody else available licensed as a Broker in our office. I personally believe I’m a lap top away from originating loans but I would be naive to think I know everything. Lets just say I’m very eager.
I’m prepared to be stunned by reality but it appears they are making me wait until the AZ office gets opened. Soon I will join the ranks in the Mtg Industry…I hope.
I have never been a Mtg Rep but many of my friends remain in the industry.
But, in the 20+ years our offices have been in the same offices of National City and Washington Financial Group. I sat 3 feet away from at least 50 Mtg Reps over the last 10 years. In essence I know how the rules of the game and how it is/was played. I know more about the bogust lies of employment, inflated appraisals, investor v. owner occupied lies , cash diversions prior to close, he-loc straps, and most likely things you have never seen occurring here in the PNW during the run-up in Nevada and Arizona.
Yes, I know homeowners lied and many should never be in a home. The lies were facilitated by the American dream of home ownership and how everyone should own a home.
So please educate me where I’m mistaken.
You will never be a lap top away from being a mortgage rep. Mortgage is very difficult to do.
You make the loan you’re in trouble, you don’t make the loan, and you’re in trouble. Every body lies and the underwriter is an idiot. It is the most labor intensive end of the Real Estate business.
Now you have Zillow in the loan lead generating business. along with the thousands of other on line, on the radio, on TV, office reps, and half page news paper ads. Every one is telling people something different. You put a loan in the bag an some other idiot under cuts you. Even if you keep the deal the customer is not happy, the customer is never happy.
By the way, don’t you have a Real Estate Brokerage? Hands up buddy, we’re going to court, and you are not going to like that.
You will never be a lap top away from being a mortgage rep. Mortgage is very difficult to do.
You make the loan you’re in trouble, you don’t make the loan, and you’re in trouble. Every body lies and the underwriter is an idiot. It is the most labor intensive end of the Real Estate business.
Now you have Zillow in the loan lead generating business. along with the thousands of other on line, on the radio, on TV, office reps, and half page news paper ads. Every one is telling people something different. You put a loan in the bag an some other idiot under cuts you. Even if you keep the deal the customer is not happy, the customer is never happy.
By the way, don’t you have a Real Estate Brokerage? Hands up buddy, we’re going to court, and you are not going to like that.
Keep in mind that there is a difference between HAMP and HARP. Rhonda, your question dealt with HARP, the refi piece of the Obama plan. HAMP deals with modifications. Like most housing counselors, I can offer quite a few thoughts on HAMP. I really don’t know much about HARP, however. The place to start for all of this is makinghomeaffordable.gov. It may not answer all the questions, but you can get a good start in the process.
Homeowners confuse HARP and HAMP–what the want is HELP. He called his mortgage servicer/bank who holds his first and second mortgage…waited for months and didn’t get HELP in the form of HARP or HAMP.