Will the servicing company reduce my rate just by asking?
Here is the reader question:
Sean says:
“What relief (with the new mortgage plan) or options (without refinancing) are available to those of us out there that have good equity in our home, high beacon scores, and have made our payments on time?
I recently contacted Countrywide (my lender) and asked them this questions, unfortunately, they transferred me to their mortgage assistance line where I was told that if I was 2-6 months behind on my mortgage and if I could make all the payments at once that they would apply this to my principle.
It is just frustrating that those who are irresponsible or those that make poor decisions are getting assistance? Yes, there are “hard luck” cases that should get help, but what is there for those of us that have always been fiscally prudent and made sound decisions? Is there a way to get the mortgage servicing company to reduce my rate just by asking?
Thank you very much for your feedback and assistance and I look forward to reply.”
My answer:
Sean,
According to the new Obama mortgage plan, those not in default or behind will be eligible for refinancing or loan modifications without the previous prerequisite of being behind on payments. The servicing company must establish the borrower is experiencing other “hardships” if the borrower is not behind on payments and is seeking a loan modification. These hardships include unexpected medical bills, a drop in income, or future automatic payment increases, to name a few. These guidelines will be used to demonstrate “need”.
But if any of these things didn’t happen to you, it begs the questions, “Why would a servicing company or lender agree to cut their income on a loan not in default or in danger of default? Is it even legal from them to do so? Why should the taxpayer support those who are not in trouble when so many are?
If you can’t demonstrate need for taxpayer assistance, you won’t (and shouldn’t in my opinion) get taxpayer assistance.
Thanks for the question!
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Tags: Mortgage Questions • Mortgage Servicing • Obama Mortgage Plan • Servicing Company
I don’t know about Sean’s particular situation but for myself, I too have a nice equity cushion, good credit, and pay my mortgage on time. We purchased our house 10 years ago when interest rates were about 8%. I’d love to refinance but it would cost me about $8000 in closing costs (I live in NY)which is money I can ill afford to spend with one child in college and another due to start in a year. We make too much money to get financial aid for college yet not enough to actually be able to afford to pay the tuition without struggling. It’s a vicious circle. Yet for all of that I consider myself very fortunate because I can pay my bills, I do have a roof over my head, I have steady income, enough food to eat, health care, and the ability to find a second job if I need to make ends meet. Is the world fair, Sean? Not at all. But count your blessings. You’re more fortunate than many.
With all due respect Sean, if your credit score is good and you are - and always have been - current on your payments, why don’t you try to secure conventional refinancing, either with your current mortgage holder or shop around if they won’t work with you. You don’t mention your current interest rate, so there’s no way to say whether or not you’ll be able to find a lower rate - government assisted or not, but it can’t hurt to try.
The “once a roach, always a roach” statement is pretentious and condescending at best, as there are a number of folks out there who have fallen onto difficult times WITHOUT having entered into a mortgage they knew they couldn’t afford.
This is the biggest problem the Feds will have trouble correcting, in my opinion. Those who obviously purchased more than they could afford should be last in line for government assistance, as well as those who are in default on property that is not their primary residence (i.e. Rental Property or speculative buys hoping to resell for profit).
Again, with due respect, to lump every homeowner who could benefit from government assistance right now as “roaches” is very bigoted and short-sighted.