Good deal on a recent re-fi

[Roland Slugg]

One of my clients called a couple weeks ago about his home loan. He had refinanced two or three other times in recent years, taking money out each time. The loan was up to $350K, and his house is worth only $250K. The current loan was about to adjust, changing from an interest-only (or less) payment to a full amortization payment, with an increase in the interest rate to boot. His payment was about to increase by $800 per month, and he could not handle it. Even a $100/month increase would be difficult to absorb. He asked for advice.

I suggested he contact his lender and be completely forthright about his situation. He called me back a week later to say he did make that call, and in just five minutes the lender agreed to lower the interest rate. He called again this week to say it's now a done deal ... the loan is now a 2½% fixed loan fully amortized over 40 years! His payment will be about $50 lower than it's been for the past year or two. The lender is charging a $500 fee to re-write the loan, but my client is very happy.

The lender in this case is Countrywide, and I wanted to post this story here in case other readers have clients that might benefit from a similar approach. I'm sure the last thing Countrywide wanted was to foreclose and take ownership of yet another house it can't sell.

[taxmandan]

Always a good idea to talk to them. It amazes me how some people will just sit there and wait for the foreclosure axe to fall and do nothing. If they have been a good payor, no delinquencies yet the lenders will work something out.

Along that line of thought, I just negotiated lower fees on my credit card merchant account, got them to lower the % and eliminate the 'per transaction' fee from each charge. Every little bit will help the bottom line this coming year.

[veritas]

Bank of America

which owns Countrywide announced an aggressive campaign to redo these type of loans. They said no one should pay more than 34% of their gross income for housing including taxes and insurance.

[S T]

Countrywide

Well Countrywide if you will remember was taken over by Bank of America. Countrywide in the past was also very good at re-writing or "streamlining" some FHA (I think) loans.

So this would seem to be a prudent way to handle some of these bad loans. I have said often in talking with my husband and others, that the lenders should renegotiate these "bad loans" that were written over the last 5 to 7 years.

Assist the clients in keeping their homes in these bad times, instead of foreclosure or short sales.

Thanks for posting this positive outcome for your client, and I would hope that we will see more positive approaches as this financial crisis moves forward.

Sandy

[veritas]

Makes me almost wish

I had gone out and mortgaged my home to the hilt.

Or maybe a Chris Dodd special from Countrywide.