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National Foreclosure Settlement Helps Homeowners


national foreclosure settlementMany homeowners with underwater mortgages have been trying to refinance so they can take advantage of the historical low interest rates. The Home Affordable Refinance Program (HARP) is supposed to help us refinance, but the banks’ participation is on a voluntary basis and the banks have no incentive to help homeowners. Why should the bank refinance and receive lower payments each month for these risky loans? It doesn’t make sense for them. The National Foreclosure Settlement is the kick in the pants that they needed. This settlement will force the 5 largest lenders to help homeowners like me.

  • Ally/GMAC
  • Bank of America
  • Citi
  • JPMorgan Chase
  • Wells Fargo

These banks will provide $25 billion dollars to help their customers. It’s only fair, we bailed them out when they needed help.

If you read my previous complaint about HARP 2.0 then you know I am trying to refinance our primary residence. Currently, our loan is a 30 year fixed rate loan at 4.75%. Our home is worth almost the same as what we owe on it. The mortgage is with Chase and I thought I should try to refinance with them first. When I called three weeks ago, the best rate they could give me was 4.625% on a 30 year fixed rate loan. That is ridiculous! I know the rates are much better than that.

Next, I called my credit union and the refinance officer told me they can refinance at 3.875%, but only if our mortgage is already with the credit union. DOH! Now, I am getting frustrated. I see that lower rate is possible, but it’s not within reach.

After this I called Umpqua bank and Quicken Loans. They both can offer me 4.25%, but Quicken loans will finish much faster and require less work on my part. So I went ahead and applied with Quicken loans and we will save about $200/month once everything is said and done.

This was a mistake! I didn’t expect the National Foreclosure Settlement on Feb. 9, 2012.

If I had a time machine, I would have gone back and told myself to hold off until March. Yes, this was what a few readers suggested. The problem was me. If I have an idea in my head, I want to act on it right away.

Last night, I received a letter from Chase. They are offering a no fee refinancing at 4.38%. If I knew about this, I would have gone with Chase. Quicken Loans has better rate, but they also have a lot of fees. The payments come out to be within $10 of each other in the end. However, if I went with Chase, the loan amount would have stayed the same instead of increasing due to the fees. The 4.25% mortgage still win out in the long run so I guess I shouldn’t complain.

If you fit any of these categories below, you should call your lender before making any move. This is from Chase’s website.

  1. If you are struggling to make mortgage payments or have missed payments: Find out if you are eligible for a modification or other alternative to foreclosure by completing and sending in a Homeowner Information Packet. We’ll contact you after we’ve reviewed your information.
  2. If you are current on your payments and interested in refinancing your loan: We will notify you by mail if you are eligible for a refinance through the settlement. Letters will be mailed in the next few months.
  3. If you had a foreclosure between 2008 and 2011: Find out if you are eligible for a cash payment by contacting your state attorney general’s office online. Those eligible will be notified by mail and according to the attorneys general website, this may take six to nine months. Chase is not making payments to customers; the state attorneys general and the Federal Housing Administration (FHA) insurance fund will receive and distribute funds to homeowners who qualify.

If you haven’t refinanced yet, this might be the best time to do it. Call your bank and demand payback!

Have you refinanced yet? Quicken Loans can rush your refinance through very quickly so if you are in a hurry, give them a call.

quicken loans refinance

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{ 42 comments… add one }
  • YFS February 17, 2012, 5:23 am

    Ahh I see why you’re not getting today’s rates. It’s because of your 100% loan to value. Does the national foreclosure settlement help you? I understand it helps homeowners but I’m sure the banks will be mandated to help people who are underwater first. A report I read specified that the 25 billion amounts to 4k per home owner. Also, the banks made trillions and they only have to give back 25 billion. Wow, what a deal for them. 25 billion is less then 2 quarters of profit for some banks. Do you think the punishment fits the crime?

    • retirebyforty February 17, 2012, 6:13 am

      From what I understand, you only get the best rate if you have some equity. Maybe 10-20%? If you are underwater or have very little equity, the refinance rates are not good. I was quoted 4.625% from Chase and another reader was quoted the same from GMAC/Ally.
      The national foreclosure settlement will enable us to get pretty good rate 4.38% at low/no cost.
      The bank should help homeowner refinance. That’s good for everyone. Perhaps even change the terms to 40 years to help more homeowners.

  • Michelle February 17, 2012, 5:29 am

    I want to refinance, we are looking into it. Lots of good info here!

    • retirebyforty February 17, 2012, 6:13 am

      Good luck! Let me know what rate you get.

  • Moneycone February 17, 2012, 6:33 am

    You’ve collected some good information RB40. I did a refinance recently, thankfully went smoothly and sure enough, the rate dropped even more! 🙂

    • retirebyforty February 17, 2012, 9:41 am

      What rate did you get? I hate it when I miss out on the best deal, but that’s life.

  • PKamp3 February 17, 2012, 7:42 am

    If you find 3.875% get that rate spread around, haha. That’s pretty epic.

    We know that the Fed (as stated) is targeting ~2% inflation, so the real cost is 1.875% annually. That’s an incredibly low spread, and every time mortgages drop further I am more and more impressed at the fact that the spread narrows even more…

    • retirebyforty February 17, 2012, 11:30 am

      Yeah, I should have gone with my credit union when I buy this place. Oh well.
      The spread is so narrows that I don’t even want to pay down the mortgage anymore.

  • cb February 17, 2012, 8:10 am

    RB40, you will probably feel better to know you would not have qualified under this settlement – Fannie and Freddie backed loans are not included. 5 of the largest banks/servicers are party to the settlement. All homeowners should benefit from the mortgage servicing reform portion of the settlement. State Attorneys General have oversight and there are penalties for non-compliance. It is hoped this settlement will put pressure on the large banks to make Harp 2.0 work.
    It is expected to take 3 to 6 months to begin implementation. That, combined with my suspicion of the big banks, makes me think the letter you received had nothing to do with the actual settlement. I suspect they are trying to refi people before this settlement and Harp 2.0 are fully implemented.
    I’m hoping this settlement will help me. I’m self-employed as a Realtor, paying 6% on my loan with Chase. Values have dropped significantly in my condo complex that is no longer FHA approved and I am underwater with no way to refi due to LTV, income and non-Fannie/Freddie loan.
    Details of the settlement are at http://www.nationalmortgagesettlement.com
    I wish relief to homeowners and accountability for the perpetrators.

    • retirebyforty February 17, 2012, 11:33 am

      Really? Thanks for the info.
      I didn’t know the settlement doesn’t include Fannie and Freddie backed loans.
      Chase is sneaky. Their letter made it sound like it is part of the settlement.
      4.38% is not bad for a no fee and I would have gone with it since I couldn’t find much better anyway.
      Hope this settlement help you too. Good luck!

  • Dollar D @ The Dollar Disciple February 17, 2012, 8:26 am

    Good luck on your refi. Damn, maybe it’s time for us to refinance too!

    • retirebyforty February 17, 2012, 11:33 am

      Yes, check around. The rate is unbelievable compare to the first time I purchased a home in 2000.

  • BE @ BusyExecutiveMoneyBlog February 17, 2012, 8:41 am

    I’m at 4 1/2% and thought that I’d never be able to do better as I only want to refi if I can improve by a full 1 point. I’m now on the lookout as this is a once in a lifetime event and another reason why I’m not paying off my mortgage and instead using that money for other investments where I can get better return. Particularly, in light of cash out refinancing seeming to be going away.

    • retirebyforty February 17, 2012, 11:34 am

      Would you refinance if they offer you a no fee deal?
      I don’t want to pay down the mortgage anymore either. Maybe I can write a post on this.

  • Roshawn @ Watson Inc February 17, 2012, 10:51 am

    We’re selling a home, so no we haven’t refinanced. It would be great to do so but see no point since we’re going to eliminate the mortgage entirely anyway.

    • retirebyforty February 17, 2012, 11:35 am

      Are you moving to a rental or buying another home with cash? It must be nice to not have that big payment going out every month. I want more details. 🙂

  • krantcents February 17, 2012, 12:56 pm

    I tried, but it wasn’t wworth it. I found a 5 year ARM at 3.01%, but the fees did not make sense with y small mortgage. My current mortgage is a 15 year at 5%. It will be paid off by June, 2017. Maybe I will accelerate it.

    • retirebyforty February 22, 2012, 10:12 pm

      Or you can just keep paying the regular amount. At this point, most of payment goes to the principle right?

  • Shilpan February 18, 2012, 6:08 pm

    This is very informative. There’s still one caveat. If you own a home with a jumbo loan in excess of $749K then you are not eligible for the HARP2.0.
    I’m paying 5.25% so it may be the best time for refinancing. Only thing I am afraid of is the value of the house. 🙂

    • retirebyforty February 19, 2012, 6:27 am

      Thanks for the info. Good luck with refinancing. Is your loan over $749k?

  • I Am 1 Percent February 18, 2012, 7:17 pm

    I’m currently in the process of refinancing my primary home.

    When we bought our home in 2009, it was a 30 year Jumbo 5/1 ARM at 4.125% for 5 years then variable afterwards. The total mortgage was $508.

    If you live in NJ or PA, Valley National Bank is offering a $499 flat rate, no closing cost refi. We paid down our mortgage to $417 (to avoid the Jumbo rate) and are getting a 15 year fixed rate at 3.5%…no closing costs.

    • retirebyforty February 19, 2012, 6:27 am

      That is a really good rate. I’m glad to hear you got it done!

  • Broke Professionals February 20, 2012, 5:11 pm

    Yup, we refinanced in the summer of 2009; we thought the “historically low” rates would be just that – historically low. Now rates on the same loan are a full percentage point lower. We are looking to move, however, and hope to take advantage of the new “historically low” rates on our new house.

  • UltimateSmartMoney February 21, 2012, 3:39 pm

    I refinanced early January 2012 with zero closing cost. It helped a lot. Cut more than $250 off of my monthly mortgage.

    • retirebyforty February 22, 2012, 10:48 am

      That’s great! I couldn’t find a no closing cost refinance. 🙁

      • Jose February 28, 2012, 11:51 am

        Its available from the big banks but it comes with little higher interest rate.

  • Hollisterguy February 22, 2012, 4:45 pm

    I refinanced in December 2011. It was a streamline refinance. My house is not worth what I paid for in December of 2010. Would this program help me refinance to what the home is actually worth not what my loan amount is? Thanks!

    • retirebyforty February 22, 2012, 10:05 pm

      From what I understand, if you qualify, the bank may adjust your loan amount. Is your loan with one of the five big banks? Keep checking on them to see if they can make you a better deal. Good luck!

  • Richard Coleman March 1, 2012, 2:08 pm

    National Foreclosure Settlement didn’t help me. My mortgage is with Citi and the payment they came up with was $16 MORE than my mortgage payment. Not much help there.

    • retirebyforty March 1, 2012, 11:21 pm

      Wow, that sucks! Did you get any rate deduction? How did they manage to increase your monthly payment? Seems a little off.

      • cb March 1, 2012, 11:42 pm

        I’m really curious how that happened too.

  • Cj March 22, 2012, 8:43 pm

    I’m currently goining through a refi, expecting to close in a week. Currently my intrest rate is 5.75. My new rate is 4.5. This is through GMAC which I have been with for 6-7 years. But I am not getting over $3000 in closing cost. Are you all saying that I should not be paying any closing costs?

    • Cj March 22, 2012, 8:45 pm

      I meant I am paying over $3000 in closing cost. Typo sorry.

  • fedFan March 28, 2012, 5:35 am

    RB40, this is a good blog. Will try to follow more closely. Thanks to everyone for all the info.

    Here is where we are at:

    We are trying to refinance our mortgage on our primary residence which we purchased in Jan’08. Our current interest rate is 6.125% with LPMI. Our loan was initially serviced by Countrywide and then taken over by BOA. After reading about the HARP program, we started looking into refinancing. We found out that our loan is backed by Fannie Mae and our LTV is probably around 113% (haven’t had an actual appraisal, but this is our best guess). We have never missed a payment or been late. So, our hopes were high.

    We were so wrong. We called BOA first but they flat out denied our request (even after a dozen or more calls) because we have lender paid mortgage insurance. During our last call they even gave me names of other lenders that might refinance our mortgage. Why they won’t do it, I have no clue. But I have read that a lot of people are on the same boat.

    So, we called Quicken loans and they jumped all over it. They immediately offered a rate of 4.485% (conditionally approved pending immigration status check). This was so quick that we are almost scared that there is a catch somewhere. We are trying to get some competing quotes to see what happens.

    Sorry for this long post. Will keep you folks updated.

    • retirebyforty March 28, 2012, 9:06 pm

      Quicken loans is legitimate. I had the same second thought – why are they so quick. I think that’s the main selling point.
      It seems you can get a bit better rate from other lenders, but quicken loan went through the process very fast for me. I’m pretty happy with them.

      • fedFan March 29, 2012, 8:42 am

        Ok. Yeah, they definitely got the ball rolling. It’s good to know that you went through Quicken and it was a pleasant experience. Our process has started, let’s see what happens. We also found out that one of friends is a mortgage consultant with a local credit union and they do participate in the HARP program. We are exploring that as well. Hopefully everything will come together pretty soon.

  • chris April 17, 2012, 6:41 am

    Hi , I live in michigan, house bal 67,000. 6.25 interest rate, fannie mae loan. My actual house value probably $25,000 probably $40,000. I am under water and I called bofa and they sent me a letter and said I did not qualify? I called them on the telephone and then they referred me to a bofa loan officer and was offered 20 year, 4.% interest, to refi 70,000. with a 90 lock on the 4% interest rate? Fee of $35.00 and and he could not give me exact closing cost buy they would be rolled into loan amount ($70,000.) ? I just cannot except this? There is no guarantee that I would get the 4% interest? As the lock is for 90 days and I do not want to take the chance, that the 90 days goes by, because of the large volumn of other people filing for the harp2? I would bet that if I signed and sent in all docs required that my loan would surpass the 90 day lock of interest rate of 4% and then depending on what ever the interest rate is AFTER THE 90 DAYS EXPIRES, I will get stuck with AN INTEREST RATE HIGHER THAN 4%? My CURRENT CREDIT SCORE is wife 784, husbands is 796?
    Second call to lendingtree, sneakly got my information that I thought he was qualifying me to a harp2, ran a credit report and tried to get $400 from me on a credit card , lied and i declined his offer? I received my packet info in the mail and I declined them? So, the fire is out and I am sitting and just waiting. I am doing nothing?

    • Jose April 17, 2012, 3:41 pm

      If you still have 20 + years to go on your 6.25% int rate and you really like your house and have no plans of moving away then dont let the chance to refi pass you by. The value of the house only matters when you are selling it–so long payments are affordable. Harp 2.0 is only good till 2013. If you can do 15 years maybe you can get under 4%. You maybe a little paranoid…90 lock should be more than enough to close a refi specially if you are going with the same bank. Ours took 1 1/2 months with citi–closed mid March. 3k on closing is average for refis. Try to get 0 point with the 4%. Get the reissue rate on your tittle company if thats required in your state. You still save on interest payments in the end…better than renting….Good luck.

  • Kp May 5, 2012, 8:11 am

    My problem is my bank combined my home and business loan together. I was at 5.95 5 yr arm which I finally got them to lower to 4.95. I’m not happy. I didn’t know how hard it would be to resplit the loan. I wanted to refinance my house and I can’t find a bank that knows how to split the loan without paying a fortune in costs. Oh, and when they lowered my rate they are still making me pay the same original payment amount! I needed that savings to put away for property taxes!

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