patrick.net

Here here is what happened:

My coworker suggested a no-cost refinance loan from Fremont Bank. I called them during my lunch break at work. The person on the phone verified physical information about our house while we spoke and took at face value the honest info. details that I told him about other particulars that were not at his fingertips on the internet.

He asked me for a verbal authorization to do a credit check on me, I said "OK". In the real time of his credit inquiry he offered to me to submit my loan application on line. I told him "nah, just send the forms in the mail so my partner and I can review them together". He said, "credit looks OK, we can lock your rate right now." I said, OK, my partner and I will review the application papers, fill them out, and hand deliver to one of your local brick-and-mortar locations around here.

This is what happened next: when I arrived home from work in the evening there was an urgent "same-day" package from the bank where we have the present loan, with an offer to modify our mortgage to a lower rate than what Fremont Bank "locked" for me, at no cost. All we'd have to do is make an appointment with their notary agent to sign the forms.

The Fremont Bank application appeared on our doorstep the next day in a UPS overnight delivery but by that time it was too late, Chase already made an offer that we could not refuse. Obviously, Chase has some kind of algorithm that hovers over the credit bureau so they react so quickly like that. Not the same thing as proactively offering a less profitable mortgage to keep our business, but since they are in business to make money I suppose I cannot really fault them for that.

So it seems like the banks will go out of their way to offer or modify a mortgage that is not underwater, to have that loan on their books. Even if it means losing a more profitable mortgage.

This occurred in recent weeks. As always my timing is bad; probably should have waited till the effects of 10-yr treasury below 1.5% trickled down to mortgages.

B.A.C.A.H. says

Obviously, Chase has some kind of algorithm that hovers over the credit bureau so they react so quickly like that.

Or maybe they have moles in other banks...

Anyway, that is a pretty interesting and amusing story.

Interesting story and thanks for sharing.

B.A.C.A.H. says

So it seems like the banks will go out of their way to offer or modify a mortgage that is not underwater, to have that loan on their books.

Hmmmm, something tells me that when it comes to loan modifications, more often than not it's the under-water folks that are making the request however.

ptiemann says

"Then you are eligible for foreclosure".

ptiemann, I appreciate you sharing your experiences and the eligibility comment above really made my day =)

I went ahead and opened up an application with WF for a loan modification on my current property. When I called them initially, they were reaching for me to quote some sort of hard-ship over the phone. They asked me if I had lost my job, no. They asked me if I have defaulted on mortgage payment, no. They asked me if I have any new circumstances where either my expenses are higher all of a sudden or income is lower, no. They asked me if my bills are high and it is making it difficult to make mortgage payments, um, sure, I suppose... Hey dummies, hard-ship or not, "does it make business sense to remain here" is just as important as the questions you are asking me

What is extremely strange is that the CSR warned that it may be difficult to get a loan modification without either showing a lost job or a missed payment. I asked her what good will it do the bank if someone with a 5% interest rate who can't make payments due to a lost job has their loan modified to 3.5%. THEY GOT NO JOB MAAAAN!!! It seems to me that the bank should be eager to work with people on loan modifications who are up to date with payments, can show strong work history and want to remain in their house! It should not be for people with lost jobs who will probably struggle regardless of 5% or 3.5% interest rate.

Next, I was under the impression that loan modifications modify interest rate, principle amount, or both. According to the CSR, I was told that WF's loan modification plan ONLY modifies rate, not principle. Essentially the only difference between a refi and a loan mod at WF is closing costs vs no closing costs. Whatever, fine.

Anyway, I'd be happy to keep you updated on the experience. Worst case, I learn a thing or two about the process. Best case (highly unlikely), I get a loan mod and save a couple hundred a month...

Everytime I get off the phone with these bozos, I shake my head.

BayArea says

Everytime I get off the phone with these bozos, I shake my head.

Sounds like nothing has changed then.

After my experience, like yours, I gave up. No HAMPSter games, just waited for the inevitable.

I think they don't reduce anything very much at Wells, but primarily because they don't want everyone who wants a reduction to start getting them. Counter-intuitive I know, but it makes sense in the aggregate.

In other words, you have to be serious enough to miss payments to get a reduction, and even then, Wells will only extend the terms or lower interest.

The bright side is that almost everyone is wrong on C4K. They were quite generous.

CL says

In other words, you have to be serious enough to miss payments to get a reduction, and even then, Wells will only extend the terms or lower interest.

That's actually spot on. I was always under the impression that a loan modification forgives principle too. Nope, not at WF. If successful with the loan mod, WF will either reduce your rate, or suck more money out of you by extendeding your loan period. Wonderful.

Anyway, as a bit of background, I called WF and demanded that they refinance me or start my short sale application on my primary residence. They said I was not eligible to refinance because my previous refinance loan closed in Jan 2010. The HARP plan requires that your loan close before May, '09. As if there aren't underwater loans that originated after May, '09!!

They said that they couldn't refinance me but that I was eligible for a loan mod. Ok, fine, let's get started (even though I don't expect in a million years for this to go through, but I'm interested in perhaps learning something new).

They overnight a loan mod application to me with a self addressed Fed-Ex envelop. They request all my finances, tax returns, itemized monthly bills, and a letter of distress where they want me to identify the hardship (lost job, divorce, injury, or dramatic change in income or expenses). Um, ok, let's go with option #4, pad it on extra thick, and hope for the best. Let's analyze those for a second.

Lost Job - How am I gonna pay you your monthly mortgage with a lost job? Have you lost your damn mind?

Divorce - Honey and I can afford this house, but alone I can't. I need help with a loan modification so I can continue living in this house I can't afford.

Injury - ok, I'm human, I won't say anything about this one, but it is a flood-gate for fraud? Hmmmm, why aren't I playing??

Dramatic change to income or expenses - conventional wisdom would say, if income changes, lifestyle should change! But somehow in the past decade, our sense of entitlement as a society has just blown through the roof.

And they want you to already show a missed payment to really have your application look good! If I am missing payments, you are probably not getting your mortgage money regardless if my rate is 5.375% or 3.5%...

This is truly rediculous. The only loan modifications that make sense in my mind and puts the homeowner and the bank in a better position is when the homeowner has a stable job, good credit, never missed a payment, wants to remain in their house, but is realizing it makes no business sense to do so anymore given the state of the market. That's the ONLY time it makes sense for both parties. Otherwise the bank is either doing all this just for show, or is delaying the inevitable short sale of foreclosure.

With the short sale the bank will lose because they will be getting less with that new homeowner than I would be paying with my 3.5% refinanced rate. WF, it's up to you, you bastards.

Anyway, my loan mod application is complete and I should know more in 2-3wks time. I'd be glad to keep you all updated :-)