Are the wrong borrowers refinancing through HARP?by Tim Manni
Not surprisingly, one of our more-popular posts on this blog is a piece titled “HARP receives one year extension — what’s the point?” Despite originally being published on March 02, 2010, the post still receives comments — the latest coming at the end of last week.
One reader originally wrote to us back in November asking why their family qualified for a HARP refi. “We are not the people in the situation HARP was designed to address,” wrote our reader in November. But in this turbulent market, our reader said it best, “This is an offer we cannot refuse.”
Here was the first (11/09/10) comment we received from this reader (emphasis added):
Help me to understand why Chase, my existing mortgage lender, fed exed me an offer to refinance with a HARP 15 yr. fixed 4.125% loan with NO CLOSING COSTS. We are not the people in the situation HARP was designed to address. Our outstanding loan balance is less than 25% of the value of the home which has continued to slowly appreciate. We should have no problem refinancing and had lots of offers when we tested the waters a few months ago.
But this is an offer we cannot refuse — reducing our interest rate a full percentage point with absolutely no fees / even no application fees. It saddens me that Chase is turning their back on people in need and catering to families like us who are not suffering from this housing crisis.
Well, this has just happened and we have yet to close but anticipate no problems. Only possible glitch is a line of credit on our home we never used which got sold off to another bank and which we need to close. They refuse to accept an agreement to subordinate (the value of the home is at least double both together).
Still, I think it’s profoundly unfair of Chase to promote refinancing to the very people who least need HARP assistance when so many others are hurting.
Just days ago, we received an update from this very same reader — their refinance (through HARP) went through without incidence. According to one source our reader talked to, this type of HARP refi seems to be happening a lot these days:
Well, just to report that our refinance flew through successfully. The notary said she has been doing loads of these for Chase’s “good customers” in the past month. She says they want to tie these homeowners down before they decide to refinance with other lenders. Not the intention of HARP I suspect.
At this juncture, I’m not exactly sure why lenders are refinancing non-underwater borrowers through HARP. Looking over some of the documentation that was released when HARP was first announced, I don’t see a concrete financial advantage for lenders to refinance current, “above water” borrowers through HARP.
Does anyone out there have a similar story about their lender refinancing them through HARP, even though they don’t seem to fit the profile of a HARP borrower?