Financially secure, but no one will refinance us, what can we do?

[aheller75]

Hello,

We are hoping to find someone who could assess our situation and help us, or at least tell us honestly if there is no helping us. I am not sure if this is the proper forum, but I figure if anyone can point us in the right direction, it would be a decent broker.

Without getting into all the details (but will supply them if necessary), we have an 80/20 split and we are upside down. We owe approx $260K and our last appraisal (about 18 months ago), came back at $240K. I can only assume it is lower now.

My girlfriend and I are two full time working professionals, earning a combined $160,000 a year. I have been at my company for 15 years, her with her company for 8 years. Both of us have absolutely spotless credit and we both maintain scores over 800. With two cars owned outright and zero credit card balances, we have no outstanding debt of any kind. Between us, we have about $50,000 cash in the bank and another $150,000 in 401Ks and stocks. We are the epitome of "low risk" borrowers, a bank's wet dream.

And no one will refinance us.

I don't know if it is because there is literally no financial institution in the world that will do it, or we have just been working with crappy brokers who are not digging deep enough, but my belief is that there must be someone out there somewhere, private or otherwise, who wants our business.

We are not looking for a bailout or principle reduction or anything like that (though we would gladly accept a principle reduction). We just want to consolidate our loans and secure a lower interest rate.

We are becoming very frustrated and do not know what, if anything, we can do. Is it possible for us to refinance based on our own financial merit? What other options do we have?

Thank you.

[iFrances]

Why do you want to refinance? Are you in a very bad rate now?
I too am a professional with a stable job, no debt, had flawless credit and wanted to stay in my house, but BoA refused to refinance because my mortgage is LESS than 30% of my pre-tax income. (That's their definition of "can keep paying" forever.) They said my only option to get a better rate is to first "pay down" the loan balance to 90% LTV.
I owe $500K balance from a no-down purchase loan for my only house, now worth just $300K. No way am I willing to take $150K out of my retirement savings just to put it into this house.
So for me the choice was either: keep paying "mortgage rent" forever in an already-high Adjustable Rate that will keep resetting up as rates rise; or stop paying, trash my credit and hope the bank will come to the table; knowing that they may choose to foreclose on me instead. I stopped paying in April 2011.
My choice was easier than yours, I'm $200K upside down on a non-recourse loan in California. (Would have been a complete no-brainier, except that I like my neighbors, but even they agree with my decision to stop paying.) A year later no Notice of Default yet, but no bank offer to refinance either.
You are only $20K upside down and if both your names are on the mortgage, it doesn't seem worth ruining your credit over, unless you have a really bad rate now or a sub-prime loan and are sure it's non-recourse. I think your best choice is to keep paying, but try to submit your names for the new 2012 Mortgage Settlement Act which has a category under which you can be refinanced to 5.25% fixed; which is not great, but maybe better than you have now, and in a few cases MAYBE get up to $20K principal reduction.


Unfortunately it does NOT apply if you have a Fannie/Freddie mortgage.
To find out if you do, check at : Does Fannie Mae Own Your Mortgage? Loan Lookup Tool


If your loan is NOT Fannie/Freddie then go to this website:
Federal Government & Attorneys General reach landmark settlement with major banks | NationalMortgageSettlement
Call the number there for the bank that holds (or services) your loan and tell them you want to be added. Also read the (long) PDF file of the actual settlement, where the appendices explain who's eligible.


Good Luck.

[Jeffrey L. Shurtliff]

You are severly upside down, that is why they won't refi you. Give them the cash to make the house right side up then they would probably finance you. Have you asked about HARP 2 ?

[aheller75]

Well, right now our first is 6.375% and the second is 7.625%. Our payments are just under $2000 per month, not including tax/insurance. I have been seeing rates of 3.5% being advertised, so the savings for us would be substantial.

iFrancis, we were only $20k down as of 18 months ago. At the time, we owed $275k and the appraisal came in at $240k. Unfortunately, we only had $25k to buy down and we just could not come up with any more money to buy it down further to refi, so the deal died. If that were still the case, this would be a non issue, we would be able to buy down and refi no problem. However, since that time our value went down, so we're just about in the same position.

We want to pay down as much as we can afford, but even if we took every liquid penny we have right now and applied it to our current priciple, we would still be upside down. We are not backed by Fannie or Freddie, so any programs that are specific to either of those are off the table.

Every broker we have spoken to says basically the same thing: "You're upside down and not backed by Fannie/Freddie, there is nothing you can do."

What we are looking for is another option. There has got to be some financial institution or private lender out there that will look at loans on a case by case basis and approve or decline based on a person's financial history, credit history, assets and job status. I understand that banks cannot just start handing people $300k for houses worth only half that, but there has to be some leeway somewhere.

Say we owe $250k, but the house is only worth $200k. If we walked into a bank with a bag of money and said "Hey, we know we are upside down, but here is $25k in cash to prove that we are serious about refinancing and honoring a new loan", I would be shocked that anyone with the power to approve or decline would shy away from that. If a borrower were not serious or did not have the means, I am pretty sure that they would not be throwing that sort of money around. Our problem is that we don't have any idea if these type of loan officers exist.

I just cannot accept that there is no place out there willing to refinance us. There is an enormous market of people just like us out there.