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Operation Refinance Denied. (Shocker)

by J. Money on Thursday, July 22, 2010

Operation Refinance DeniedOperation Refinance Denied. Again. But as mothers always say, you’ll never know unless you try! ;) And I’m no stranger to failing in this department, so it’s not like it came as a surprise.

The last time we tried to refinance (or, investigated I should say) we got shut down by my bff USAA before I could even finish my sentence.  We were $60k underwater then, and we’re $59,999 underwater now  ;) Not much progress on our end I must admit.

BUT, and here’s the AWESOME part of the story, while we get screwed from the help it doesn’t mean you guys do!  There are some pretty bad ass new programs out now that allows many more  to get refinanced than before . If you meet all the guidelines of course.  And for some of them that means lots of hardship and misfortune – something the Mrs. and I thankfully don’t have  (knock on wood).  So while it pisses me off that we get passed on the new programs out there, I AM happy to report the ones who need it the most now have a better shot :)

Here’s a quick breakdown on all the programs now available, copied directly from Obama’s “Making Home Affordable” plan:

“The Making Home Affordable Program is part of the Obama Administration’s broad, comprehensive strategy to get the economy and the housing market back on track. The Making Home Affordable Program offers strong options for homeowners: (1) refinancing mortgage loans through the Home Affordable Refinance Program (HARP), (2) modifying first and second mortgage loans through the Home Affordable Modification Program (HAMP) and the Second Lien Modification Program (2MP), (3) providing temporary assistance to unemployed homeowners through the Home Affordable Unemployment Program (UP), and (4) offering other alternatives to foreclosure through the Home Affordable Foreclosure Alternatives Program (HAFA).”

And here’s what all that means :)

Home Affordable Refinance Program (HARP)

If you pay your mortgages on time, but aren’t able to refinance to take advantage of today’s lower mortgage rates (maybe because your way underwater due to losing value in your home). A Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage.  (This is the program we wanted to get into but we don’t fall under Fannie Mae or Freddie mac.  But maybe YOU do?)
Click here to see if you’re eligible.

Home Affordable Modification Program (HAMP)

If you’re struggling to pay your monthly mortgage due to interest rate hikes or loss of income, this Home Affordable Modification plan might be able to provide you with more affordable payments.  (What I mentioned earlier – only helps you if you’re really drowning).
You can find out here if you’re eligible for this one.

Second Lien Modification Program (2MP)

If you’re struggling to make payments due to a second lien. The 2nd Lien Modification Program (2MP) offers homeowners a way to lower payments on their second mortgage when their first mortgage is modified under the Home Affordable Modification Program. (not as sexy as the first 2 options up there in my opinion, but still a good option!)
More info on this guy here.

Home Affordable Foreclosure Alternatives Program (HAFA)

And lastly (the worst case scenario) if there’s no way you can afford your payments any more, but you want to avoid the negative effects of foreclosure. The Home Affordable Foreclosure Alternatives Program offers homeowners $3,000 to help transition to more affordable housing when you complete a short sale or deed-in-lieu of foreclosure.
More info on this one here.

Again, these may not apply to everyone but it never hurts to spend a few minutes checking them out!  It literally cost me 20 mins of my life – and that’s going back and forth on the phone between 2 companies – to see if we qualified for any of these guys (well, except for 2MP and HAFA, not trying to go down that route). So do it now if you need the help! It’s pretty eye opening to see what’s available. Just too bad we’ll personally have to dig ourselves outta this one. But hey, we got ourselves into it right?

(Note to self:  Never buy a house again.)

———–
More questions and answers on the programs here.


{ 17 comments… read them below or add one }

1 Rachel211 July 22, 2010 at 10:29 am

I’d be curious as to what the average person is underwater on their home now that the bubble popped. Personally, here’s ours:

Owned for 3 years
Upside down $24,000 from buying cost

Actually I think we made out better than most. More than a few of our friends in Orlando lost their houses and went bankrupt. Most are about $100k under! :(

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2 J. Money July 22, 2010 at 11:14 am

OUCH. Yeah, Florida got hit hard. $24k down isn’t too bad in comparison :) Although, it also depends on how big your house/mortgage is too. Losing $25k on a $100k house is 25% loss where as $100k on a $1,000,000 house is only 10%. But I am interested to see how much everyone else has lost too :) I’ll throw mine out here too although you already know it (gotta follow your rules, right?):

Owned 3 years
Upside down from $70k at the least from buying cost

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3 kt- lifedividend July 22, 2010 at 11:56 am

wow mortages are complicated. I read things like these because i would like to invest in mortgage bonds and all those derivatives backed in some ways by mortgages but not really to get one. It just scares me; you know getting a mortgage. Getting one at this age would make me feel all settled and stuff and i still have a travel bug eating away at me very ferociously

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4 Rachel211 July 22, 2010 at 12:24 pm

I think ours was about a 13% loss – which I think we will get back since we don’t plan on moving for at least 10 years. But yeah, ouch.

We knew the crazy house prices were really bad in Orlando already (that’s where my hubby works) and we had seen COMPLETELY TRASHED houses for over $300,000 in bad areas. It was insanely overpriced. You couldn’t get a one room shack for less than $200k. So we figured out the cost of commuting and how far away from town we could get. We found a nice little town about 35 miles out of town with a totally flipped house for less than half the cost it would have been in Orlando. The drive is about an hour for him – BUT if we would have lived on the other side of Orlando the traffic would have made his commute just as long.

So yeah, with a totally remodeled house – we are okay with the $24k drop. For now anyway! :)

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5 StackingCash July 22, 2010 at 12:46 pm

I hope you take this lesson learned and apply it to the stock market. At least you have a roof over your head. A nice roof from what I can tell :)

Might want to sell your stocks and mutual funds right now since the market is flying high and get back it after another crash. The DOW is up 200 points right now! :) SELL!!!!

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6 Samurai July 22, 2010 at 12:53 pm

Hey J, sorry to hear you didn’t pass. Can you extend to us why they denied you?

I tried doing the mod for one of my vacay properties, and they denied me b/c the first question from the program is: “Do you currently live in your house?” i.e is this your primary residence. They make you sign an affadavit too, so one can’t lie.

What is the rate and duration you are currently trying to refi from? Mine is 5.875%. I wanna get that sucker down to below 5% at least.

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7 J. Money July 22, 2010 at 6:07 pm

@kt- lifedividend – That’s exactly why I don’t want ours anymore! The money part of it sucks, but it’s really the feeling of being tied down and old :(
@Rachel211 – Scary!!! Yes, you guys are a-okay. Especially if you’re staying in it for a while :)
@StackingCash – HAH! No way! I want to BUY, BUY, BUY! I still feel like they’re low and so I’m trying to scoop up as much as I can now so in 10 years i’m sitting pretty. What would I do with all that money if it weren’t invested?
@Samurai – Oh yeah, sure – Our mortgage isn’t backed by Fannie Mae or Freddie Mac :( So then we were led to option #2, which we couldn’t do since we’re nowhere near “hardship”, so the last option was to do modification stuff – but after 2 mins of listening to what that entails it didn’t seem worth it. Our rate is high (6.875%) BUT it’s locked in, so no worries about crazy resets or anything. If I knew for a fact we’d be there for 5+ years I may consider it, but dishing out a few grand to save a few grand in a few years doesn’t make much sense to me. So we’ll try again later! :)

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8 TODHD July 22, 2010 at 6:48 pm

I see a lot of people trying to refinance on their homes nowadays and the banks keep denying all of these people

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9 Samurai July 22, 2010 at 6:55 pm

Hey J, I hear you. I went through the long list of questionnaire things as well and started to get a headache so I just cut them off.

Is it possible to SAY you are going through hardship and discuss a sob story? i.e. my firm is on shaky ground, and my wife has student loans to pay off and is not working with triplets on the way or something?

Seriously, maybe that will help?

Cuz, if I was your bank, and it was the difference between you defaulting, and lowering your rate to say 5.875%, I’d lower your rate in two seconds!

Thoughts?

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10 Mysti July 22, 2010 at 7:13 pm

We are about 25k underwater, and that is being conservative. With closing and such, we are probably closer to 30k. And we don’t have a Fannie or Freddie mortgage either.

We are in the same boat as you…..scoot over. ;)

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11 Glass Is Half July 23, 2010 at 3:35 am

Is the states the same as the UK in that obtaining a mortgage entails a credit check and regardless of approval you get a footprint on your record? Makes it hard to try and get credit out here as you know that just in applying you are going to be impacting yourself further down the line.

If you don’t mind my asking – the reason for refinancing was … ? Again out here, if the reason is provided as “home improvement” it is looked at more favourably vs. “debt consolidation”.

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12 J. Money July 24, 2010 at 1:31 pm

@Samurai – Hah! I like the way you think, but I’ve gotta believe things are a lot more sticter now than back in the day ;) Plus I’d feel kinda bad lying, even if it did save us a hefty amount. I’m kinda hoping some new plan comes out in the next year or two, or that I just unload it for that matter. I really can’t see myself staying here and being happy – my wannabe minimalism side keeps getting stronger!

@Mysti – Hey, this boat is plenty big for all of us :) What the others don’t know though is that we’re headed to the land of fortunes! haha…opposite of.

@Glass Is Half – OH yeah, credit checks are def. being done over here, although not too sure on how big of a footprint the check is on the records. If you’re looking for a house or refi and you get 2-3 checks I’m sure it’ll be fine. But if you’re trying to pick up boats and cars and houses and bling, etc etc, it’ll prob start looking bad.

As for *why* we want to refinance, it’s simply just to save money every month. Probably $200-$300 in a perfect world. But then again, that also means we’d have to shell out $3k or more just to DO the refinance – so pros and cons. I don’t think the reason for refinancing though comes into play over here, just the numbers and risk factor. Interesting idea though :)

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13 Financial Samurai July 24, 2010 at 1:54 pm

The great irony is that the MORE you borrow, the more the $2.5-3K it costs to refinance is a no brainer. If you borrowed $1.5 mil and dropped your rate by 1% for example, you’d save over $1,000 a month interest cost and pay for the ref fee in just 2.5-3 months!

Hence, it’s good to borrow a boat load and be rich!

Also, have a re-read of your old post about how happy you were refinancing. Remember back to that time, and if you are making more money now and are more secure, then it’s all good!

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14 finallygettingtoeven.com July 25, 2010 at 1:30 pm

My son’s bank was less than helpful on a loan mod program. He filled out all the necessary forms and jumped through all the hoops (he is currently un-employed) and was hoping for a reduction until he can get back on his feet. The bank informed him that they couldn’t help him at all because “based on his information he can no longer afford to live in his house so they feel it is a waste of their time to go through the mod procedure because he will lose the home anyway.”. How’s that for help? How do they know he will ultimately lose the home. Anyway, he has no intention to and will continue to eat hot dogs for 3 meals a day until times get better. Some help, why bother offering it if that is going to be your attitude.

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15 J. Money July 28, 2010 at 10:11 pm

@Financial Samurai – That is sick, isn’t it? I hope to never borrow over $300k again though :) Or if I do, it’ll be on a smaller but way PIMPER place! Gonna try and get outta this place as soon as we’re able to.

@finallygettingtoeven.com – That blows. Good for him in sticking it through and accepting responsibility though! Yeah it may not be a good business decision, but we gotta keep our word and pay what we promised to pay.

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16 mila October 21, 2010 at 7:34 pm

I’m in rather similar situation with @finallygettingtoeven.com —
Not so similar in that the house that I’m in is under mine & my brother’s name, then — My brother got laid off but I still have my job…
The similar situation is that the bank denied our application for modification program for the same reason as @finallygettingtoeven.com’s son.
We (technically) still can afford the house (barely) but, applying for the mod program so that at least the monthly payment can be reduced — but, not sure why we keep being denied though…
Any ideas?

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17 J. Money October 25, 2010 at 12:21 am

That your lender doesn’t care??? I’m so over some of them. I wish I had a good answer for you but I just don’t :( I can tell you that you’re not alone though! so hang in there :)

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