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Sunday, May 11, 2008

My Time In Hell/Refinancing A House During The Mortgage Meltdown

To all of my readers, I have nothing but the deepest sympathy and compassion for the one million American families who have lost their homes due to foreclosure. This crisis has affected millions of American people. Six million more of us could face foreclosure as loans reset and interest rates creep up over the next two years.

Three months ago Elena and I went out bravely to refinance our home. We have a subprime loan from Country Wide Home Loans. We went first to them. They urged us to refinance immediately despite the fact that we would have had to pay a $23,000 prepayment penalty. They loaded our credit files with all sorts of inquiries. They came up with no solutions.

House Speaker Nancy Pelosi and the late Congressman Tom Lantos (Bless their hearts) got the Federal Housing Administration to raise their loan limits from $417,000 to $729,000. We could now go out and get a government guarantee to get our home refinanced.

My wife has credit scores of over 700. She has been a doctor for 24 years. Our family income is in the top 3% of the US and in the top 1% of world's income. By the way, we earned that by some incredible hard work and sacrifices. We thought it would be an easy matter to get a new loan.

I hit the internet to find a lender with FHA specialization. None appeared in California. Two FHA specialist firms appeared on the East Coast. I interviewed both of these companies and chose National Future Mortgage,Inc. in New Jersey.

We went to work in earnest. The first challenge was an appraisal. Property values have dropped as a result of the bad real estate market. City Wide Appraiser appraised the house. They did a really professional job. We got a value that reflected a decline in the market but was fair,rigorous and professional.

We then had to submit a ton of papers for the FHA to look at including W-2's,bank statements, etc. Our CPA allows us to file separately and allocates income. Therefore my wife's W-2 does not match her tax return data. FHA could still turn us down for this reason.

Our second challenge was the second lien we have on the house with Wells Fargo Bank. Real Estate and loan brokers warned me that they were very tough and blocked many refinance deals. I am a man who refuses to take no for an answer. I did a lot of research and located their Loan Subordination Department. Much to my surprise the manager of the department called me and was most helpful.

In these bad times, Wells Fargo still generates a profit for their share holders. They are making a lot of real estate loans. They survive because they try to look at each customer as an individual.
Their staff and managers are a group of ladies and gentlemen and professionals. They still could demand that we pay an additional $50,000 to lower our loan to value ratio. I think they will be more reasonable.

When I got out of the US Navy 35 years ago, I started my career helping people to get mortgage loans. I know how to prepare professional presentations. I know lenders. I do not quit when I have a problem with an 800 number that does not work or gives a bad answer.

My wife and I are in a household with two post graduate degrees and an incredible income. We know the finance industry. What worries me is all the average people out there with just a high school education and a family income of $50,000 to $75,000 per year. What hope do they have of navigating through all of these obstacles to avoid foreclosure????????????????????

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Posted By ohomen171 to OHOMEN171 at 5/11/2008 03:58:00 PM

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