A bit of background: I purchased my home in Central Florida in December of 2006 for $165,000, with 5% down and a 30 year fixed rate mortgage at 6.2%. I currently pay a total of $1,260 a month on the loan (principal, interest, taxes, insurance and PMI). I have not been late or missed any payments since I took out the loan. I have excellent credit (average score of 803) and otherwise meet all of the requirements for the loan. While Fannie Mae owns my loan, it was originated through Wachovia who within a year of closing "sold" it for servicing to U.S. Bank. I currently owe approximately $145,000 on a home that I estimate is only worth around $100,000 (LTV 145%).
As suggested by the Home Affordable website, I initially contacted U.S. Bank to see what it would cost for me to refinance from a 30 year fixed to a 15 year fixed, which U.S. Bank advertised as 2.75%. Without even checking my credit score, or other payment history, the best rate U.S. Bank said they could offer was 3.125% with a 1% fee for discount, plus a $300 application fee for the refinance.
I asked the U.S. Bank Loan Officer why I could not qualify the rate advertised on their website and he replied that the high LTV meant I was not eligible for the standard mortgage rates listed on their site and that this is the best rate that I could qualify for. I pulled up Fannie Mae's current LLPA pricing matrix. Unless, I am reading this wrong, it appears that HARP Refi Plus loans originated after January 1, 2012, with an amortization term of 20 years or less, are not subject to LLPA pricing.
So I then proceeded to contact Wells Fargo, which manages my banking, IRA and brokerage account and asked if they could do better. As a valued client, they immediately said they could offer me up to 2.75%, with no points and no application fee, assuming I qualified for the loan. I submitted my application only to get a response yesterday from the loan officer that Fannie Mae's Desktop Underwriting software had rejected my application and deemed it ineligible due to a "credit enhancement" on my PMI. She asked who my PMI coverage was through. I contacted U.S. Bank, who indicated it was through Republic Mortgage Insurance Corporation. She's looked into further, but still has been unable to provide me with an explanation for what exactly this credit enhancement is or why it would prevent my from participating in the Harp program when I otherwise meet or exceed all of the qualification requirements.
The only possible explanation that I can find is that Fannie Mae, since July of 2011, has apparently suspended their relationship with Republic for failure to retain sufficient capital reserves to cover losses. As a result, Fannie Mae will not purchase or secure any mortgage insured by Republic that was made before 5/1/11 or after 9/1/11. Fannie Mae, however, already OWNS my loan.
If anyone has insight as to why I am being deemed ineligible, I would really appreciate it. I realize it may be a problem with the DU Refi Plus program and that to get around this my mortgage may need to be manually underwritten as a straight Refi Plus loan. I get the impression, however, that only the bank servicing my loan can do this, which means my only option will be to apply through U.S. bank and accept their higher interest rate and fees.
Thanks for all of your help.