One couple’s tale of refi rejection

[Ex-SD]

October 5, 2009
From The L.A. Times

If you missed David Lazarus’ column on Sunday, it shows how the pendulum has swung from easy refinancing to darn-near-impossible refinancing, using the example of Glendora residents Angie Trujillo and Carl Heinzen, who applied for a refi several weeks before Trujillo was laid off from Bank of America in March and spent months satisfying the paperwork requirements:

But in August, they learned it had been rejected. The reason, according to the letter they received from the bank: “Income insufficient to support expenses.”

Apparently BofA decided not to take into consideration the $58,000 severance package Trujillo received from BofA along with her pink slip.

Or her $377,000 BofA pension.

Or her $156,000 in savings at BofA.

Or the $10,000 she and her husband deposit at BofA monthly for rental properties they own and manage.

Not to mention the $450,000 value of their house, as appraised by BofA for their current BofA loan of $280,000.

Oh, and let’s not overlook that Heinzen’s FICO credit score was 809 at the time of their refi application and Trujillo’s was 764, placing them among the least-risky loan seekers in the country.

I understand banks not wanting to loan to the unemployed — nearly 10% of the population according to the latest U.S. figures. And just because someone has a pension and hefty personal savings doesn’t mean they won’t decide to strategically walk away if values decline further. But it still surprised me that even with their rental income, they were considered too risky for the refinance.

Story link:
http://latimesblogs.latimes.com/laland/2009/10/one-couples-tale-of-refi-madness.html

[EconProf]

I’ve never understood why banks put so much stress on current income, and so little on net worth. It takes discipline to save and accumulate assets, which ought to be the best indicator of default probability.
I’d suggest this couple keep on looking to refinance. Lenders cannot all be that stupid.

[EconProf]

I’ve never understood why banks put so much stress on current income, and so little on net worth. It takes discipline to save and accumulate assets, which ought to be the best indicator of default probability.
I’d suggest this couple keep on looking to refinance. Lenders cannot all be that stupid.

[EconProf]

I’ve never understood why banks put so much stress on current income, and so little on net worth. It takes discipline to save and accumulate assets, which ought to be the best indicator of default probability.
I’d suggest this couple keep on looking to refinance. Lenders cannot all be that stupid.

[EconProf]

I’ve never understood why banks put so much stress on current income, and so little on net worth. It takes discipline to save and accumulate assets, which ought to be the best indicator of default probability.
I’d suggest this couple keep on looking to refinance. Lenders cannot all be that stupid.

[EconProf]

I’ve never understood why banks put so much stress on current income, and so little on net worth. It takes discipline to save and accumulate assets, which ought to be the best indicator of default probability.
I’d suggest this couple keep on looking to refinance. Lenders cannot all be that stupid.

[patientrenter]

According to people in the trenches, banks virtually never collect deficiencies on home loans directly from the borrowers. So assets beyond the house are nearly irrelevant. If these folks are really prepared to put those other assets at risk in order to support the new loan, then they can simply pay down some of the loan.

If they do that, and still have a problem refinancing, then I’ll be curious.

[patientrenter]

According to people in the trenches, banks virtually never collect deficiencies on home loans directly from the borrowers. So assets beyond the house are nearly irrelevant. If these folks are really prepared to put those other assets at risk in order to support the new loan, then they can simply pay down some of the loan.

If they do that, and still have a problem refinancing, then I’ll be curious.

[patientrenter]

According to people in the trenches, banks virtually never collect deficiencies on home loans directly from the borrowers. So assets beyond the house are nearly irrelevant. If these folks are really prepared to put those other assets at risk in order to support the new loan, then they can simply pay down some of the loan.

If they do that, and still have a problem refinancing, then I’ll be curious.

[patientrenter]

According to people in the trenches, banks virtually never collect deficiencies on home loans directly from the borrowers. So assets beyond the house are nearly irrelevant. If these folks are really prepared to put those other assets at risk in order to support the new loan, then they can simply pay down some of the loan.

If they do that, and still have a problem refinancing, then I’ll be curious.

[patientrenter]

According to people in the trenches, banks virtually never collect deficiencies on home loans directly from the borrowers. So assets beyond the house are nearly irrelevant. If these folks are really prepared to put those other assets at risk in order to support the new loan, then they can simply pay down some of the loan.

If they do that, and still have a problem refinancing, then I’ll be curious.

[ucodegen]

What I have been seeing with BofA, is that if you already have a loan with them with something like a ARM that will reset in about 2 years.. they don’t want you to refi to a fixed at current rates. This is particularly true if you have a pre-payment penalty on that ARM.

If you have a BofA loan, you may want to look at refi-ing outside of BofA.

[ucodegen]

What I have been seeing with BofA, is that if you already have a loan with them with something like a ARM that will reset in about 2 years.. they don’t want you to refi to a fixed at current rates. This is particularly true if you have a pre-payment penalty on that ARM.

If you have a BofA loan, you may want to look at refi-ing outside of BofA.

[ucodegen]

What I have been seeing with BofA, is that if you already have a loan with them with something like a ARM that will reset in about 2 years.. they don’t want you to refi to a fixed at current rates. This is particularly true if you have a pre-payment penalty on that ARM.

If you have a BofA loan, you may want to look at refi-ing outside of BofA.

[ucodegen]

What I have been seeing with BofA, is that if you already have a loan with them with something like a ARM that will reset in about 2 years.. they don’t want you to refi to a fixed at current rates. This is particularly true if you have a pre-payment penalty on that ARM.

If you have a BofA loan, you may want to look at refi-ing outside of BofA.

[Author]

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