Stuck with current servicer for HARP refinance? (PMI, loan, credit score)

[Thepreacherswife]

Our current servicer (rhymes with "base") called today offering to do what must be a manual Refi+ (no appraisal, just voice verification of income). Here's what we were offered:

5.375% (our current rate is 5.875%), 30-year fixed (we have a little less than 27 years left), credit against closing pretty much wipes out all closing costs (our credit scores were both over 775) with an estimated LTV < 105%. New loan amount of about $250K.

The monthly P&I reduction is about $150; the GFE says PMI will drop by $40 a month also, but I have no idea whether that's realistic.

It's a low-rise condo and we currently have PMI (original LTV was 89%).

So, should I bother trying to get any competing quotes, or is the condo + PMI going to make it difficult to get any other originator to bite? This is in Chicago, BTW.

[ShanetheMortgageMan]

You said there was a credit that "pretty much wipes out all closing costs", so what costs are remaining that isn't covered by the credit?

[SmartMoney]

So, should I bother trying to get any competing quotes, or is the condo + PMI going to make it difficult to get any other originator to bite? This is in Chicago, BTW.

The short answer is not really. The reason is simple, but excuse my bluntness. No bank wants another bank's (potential) problem, if a manual underwrite is required. Your loan, just with the high LTV is a high risk loan. Add to the fact it's a condo, which further restricts what kind of financing would be eligible in that project. Homeowners of all scores are walking away from under water property. Your bank has a financial incentive (thanks to Stim I or Stim II or other bank bailout) to refinance your loan, or they would not be making the offer.

You are fortunate to have the offer on the table - it's a take it or don't do it kind of proposition.

[Thepreacherswife]

Originally Posted by SmartMoney

The short answer is not really. The reason is simple, but excuse my bluntness. No bank wants another bank's (potential) problem, if a manual underwrite is required. Your loan, just with the high LTV is a high risk loan. Add to the fact it's a condo, which further restricts what kind of financing would be eligible in that project. Homeowners of all scores are walking away from under water property. Your bank has a financial incentive (thanks to Stim I or Stim II or other bank bailout) to refinance your loan, or they would not be making the offer.

You are fortunate to have the offer on the table - it's a take it or don't do it kind of proposition.

That's what I figured. If there wasn't some sort of government subsidy involved, the bank could care less as long as I pay on time. I imagine in exchange for lowering my rate the bank basically gets the foregone interest up front in incentives.

I am certainly not looking a gift horse in the mouth here; I just wanted a sanity check. Thanks for the help.