Never give up trying to get better loan terms.
You might get lucky.
By JEFF LAZERSON / CONTRIBUTING COLUMNIST
A dear friend and a longtime Orange County mortgage client of mine fell on hard times during the Great Recession.
Her income plummeted. Credit card debt mounted, dropping her FICO scores from the top tier she enjoyed for years.
To protect her identity, I’m calling her Lucky Lucy. You’ll see why in a moment.
At least twice a year, for at least the past seven years, she would dutifully contact me, asking about any new possible, easier-qualifying loans or a come-on mailer she received from time to time.
Not long ago she received an overnight package from her mortgage lender, Chase Bank.
“Dear Lucky, it seems that responsible homeowners like you who always make their mortgage payment on time are the only ones who haven’t received mortgage relief,” is the way the letter started.
“It feels like it wasn’t real. I have to be honest,” said Lucky. So, the long and short of it was Chase refinanced Lucky Lucy without any charges, reducing her mortgage by $488 per month by knocking her rate down one-half point to 4.375 percent.
Chase purportedly did this through the old HARP program, or Home Affordable Refinance Program, that was born in the mortgage meltdown days.
There seems to be one big question mark with this, though. According to Lucky, by Chase’s estimate, Lucky’s home is worth $1.3 million and her combined mortgage debt is $537,000.
That makes her equity more than 57 percent. The HARP program was designed for folks with a Fannie or Freddie mortgage that are making their payments on-time but have lost equity or have gone completely underwater.
HARP parameters require current borrowers to have less than 20 percent equity.
“She probably should not have qualified for HARP,” said Peter Garuccio, spokeman for the Federal Housing Finance Agency, Fannie and Freddie’s regulator that was involved in creating the HARP program.
Chase Bank does not comment on individual borrowers. Chase announced in January that it has helped a half million families take advantage of low rates through HARP.
HARP expires Dec. 31 for outreach for remaining eligible borrowers. As of the fourth quarter 2015, there were 18,204 residential properties in Orange County with 5 percent or less equity, according to CoreLogic. Valuable information about HARP is available at www.harp.gov. Maybe you qualify.
Another program to consider is Freddie Mac’s Relief Refinance Mortgage.
Fannie and Freddie have several loan modification options, according to Garuccio. These differ from HARP in that they are a modification of an existing loan and are meant for borrowers who are struggling to make their payments.
If you are struggling, trying to get better terms or payment relief, and you’ve been turned down, my point about Lucky Lucy is to be diligent.
Whether it’s a conventional loan, FHA, VA or some other animal, keep asking and be aware. Call your loan servicer. Look for opportunities and cautiously check them out.
Maybe you’ll get lucky too!
Jeff Lazerson - Mortgage Columnist since 2011