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Recently my father got a letter from Quicken Loans on behalf of his Mortgage Company Cenlar. The letter said that Quicken Loans was servicing HARP loans for home owners who were underwater. My father has a first Mortgage with a balance of $94,000 and a second mortgage for $36,000. The value of his home is only about $94,000. It was over $140,000 before the recession.
When I called Quicken loans, they said they could only refinance the 1st mortgage. My father qualified because he’d never been late on his mortgage and met all the qualifications of HARP. They offered a 20-year loan at 3.75% interest rate for 0 points. The loan officer said my total closing cost would be around $2300 and rolled into the loan.
When I got the 1st Good Faith Estimate (GFE), they valued the house at $109,000 and there was a $365 charge in points for the 3.75% interest rate. This was the first red flag. The loan officer originally told me there would be no cost for the interest rate. When I asked about the charge, he really didn’t give an explanation and said it would be rolled into the loan. He kept selling the fact my father’s old loan was 6.35% and he would be saving $300 a month with the lower rate. I let it go, since it was a relative small amount.
To my horror, after my father signed the paperwork, we got an updated GFE with a $2300 charge for the 3.75% interest rate! This put the total closing costs at $5,260. I was livid! The loan officer said that a new home valuation came in putting my father’s house at $121,000. He said since my father has equity in his home (based on the new valuation) he lost the discount credits toward closing costs from Freddie Mac who was an investor in his loan. I was dumbfounded. My father was being penalized because he had equity in his home? That was really backwards and didn’t make sense.
I was under the impression that closing costs for HARP were minimal anyway. He said the closing costs are only minimal for homeowners underwater because they qualify for discount credits towards closing costs. He said our only option was to get a higher rate at 3.99%, with $3600 in lower closing costs, or cancel the refinance.
My father is really disgusted at this point and wants to pull out. The whole thing smells of a bait and switch. Is what the loan officer said about the discount closing credits true? Or something he made up to get a higher commission? Any comments are appreciated!
Quicken Loans lies. I have a couple sets of docs that clients have sent to me. They start out with a large Lender Credit to offset costs, but do not include it in the binding GFE. Then once you've paid your "Application Fee -" whatever that is - and the appraisal fee, you get a call from "Quality Control" and you find out you "no longer qualify" for that credit.
They are absolutely lying to you and you should sever ties with them.
Recently my father got a letter from Quicken Loans on behalf of his Mortgage Company Cenlar. The letter said that Quicken Loans was servicing HARP loans for home owners who were underwater. My father has a first Mortgage with a balance of $94,000 and a second mortgage for $36,000. The value of his home is only about $94,000. It was over $140,000 before the recession.
When I called Quicken loans, they said they could only refinance the 1st mortgage. My father qualified because he’d never been late on his mortgage and met all the qualifications of HARP. They offered a 20-year loan at 3.75% interest rate for 0 points. The loan officer said my total closing cost would be around $2300 and rolled into the loan.
When I got the 1st Good Faith Estimate (GFE), they valued the house at $109,000 and there was a $365 charge in points for the 3.75% interest rate. This was the first red flag. The loan officer originally told me there would be no cost for the interest rate. When I asked about the charge, he really didn’t give an explanation and said it would be rolled into the loan. He kept selling the fact my father’s old loan was 6.35% and he would be saving $300 a month with the lower rate. I let it go, since it was a relative small amount.
To my horror, after my father signed the paperwork, we got an updated GFE with a $2300 charge for the 3.75% interest rate! This put the total closing costs at $5,260. I was livid! The loan officer said that a new home valuation came in putting my father’s house at $121,000. He said since my father has equity in his home (based on the new valuation) he lost the discount credits toward closing costs from Freddie Mac who was an investor in his loan. I was dumbfounded. My father was being penalized because he had equity in his home? That was really backwards and didn’t make sense.
I was under the impression that closing costs for HARP were minimal anyway. He said the closing costs are only minimal for homeowners underwater because they qualify for discount credits towards closing costs. He said our only option was to get a higher rate at 3.99%, with $3600 in lower closing costs, or cancel the refinance.
My father is really disgusted at this point and wants to pull out. The whole thing smells of a bait and switch. Is what the loan officer said about the discount closing credits true? Or something he made up to get a higher commission? Any comments are appreciated!
Let's start with, Quicken wasn't doing anything on behalf of your Dad's current servicer. Quicken was soliciting a refinance on their own period. The letter was deceptive right off the bat.
Quicken may be telling the truth about the costs. The "price hits" for things like credit score are limited on a HARP loan. Sounds like they may have determined that your Dad actually had 20% equity in the property which pulls him out of HARP and back into the regular conventional world. Was their an actual appraisal performed or are the going by the HVE (automated home valuation)?
Unless a borrower has a super standard/easy deal AND knows exactly what they are doing as far as mortgage financing they should never use Quicken or an online mortgage service. This rule would rule out about 80-90% of the deals out there.
When did the loan close? If he is still in the rescission period (3 business days after closing) he should rescind. Rescind=cancel the deal. He can do so with no costs or obligations. It is very simple to do so. He can fax in the rescission form in his closing packet. Make sure he gets confirmation that is was received.
We have several loan officers that have personally refinanced and closed with Quicken. All of the experiences have been good and they have closed on loans we (as a bank) could not do. The rates have been fair (considering lack of value) and the closing costs reasonable. I have recommended Quicken many times based on their experiences.
Many of these customers obtained their mortgage just for having a pulse and they've been told no dozens of times with their refinance, so they haven't been able to get a mortgage with the new legislation in place. They aren't use to the LLPA's (loan level pricing adjustments) for variations in LTV, credit score and so on. So, it has the stink of rip-off, which is really quite hard to do in our current environment.
Fortunately, the OP's father has a choice.........stay with his current mortgage or go with a HARP - but I'm betting most are very similar to his current offer.
After going through the complete 2 month process of documenting and finally closing on my loans with quicken (refinanced 3 rental property) they sold my loan right back to CENLAR. Question they haven't responded to is obvious. Why could CENLAR adjust my loan to the lower amount and save me $4k in closing costs? Complete scam and have forwarded to attny general's office.
After going through the complete 2 month process of documenting and finally closing on my loans with quicken (refinanced 3 rental property) they sold my loan right back to CENLAR. Question they haven't responded to is obvious. Why could CENLAR adjust my loan to the lower amount and save me $4k in closing costs? Complete scam and have forwarded to attny general's office.
There are no laws that compel lenders to adjust loan terms. You signed documents detailing terms when you got those loans. Your phone call to the Attorney General will likely be brief.
To the guys above and future readers of this post.
If you are (not late) looking to refinance, it would be wise to talk to your existing lender about doing an "In-House" or "Streamline" Refi.
Closing costs are minimal to nothing. Since the title is not changing hands, there's no title charges. Possible legal fees out of pocket, might be for a notary republic to witness your signature to sign the closing documents to return back to the lender.
To the guys above and future readers of this post.
If you are (not late) looking to refinance, it would be wise to talk to your existing lender about doing an "In-House" or "Streamline" Refi.
Closing costs are minimal to nothing. Since the title is not changing hands, there's no title charges. Possible legal fees out of pocket, might be for a notary republic to witness your signature to sign the closing documents to return back to the lender.
My $00.02
Last week I got a call from my original lender (ERA), offering a refinance under HARP (Fannie Mae). Closing costs over $3,000, and included a title fee.
"Pre-approved " but kicked back by underwriters because it didn't pass review of anti-preditory lending act. Huh? WTH? Was going to cut 3 years off the loan by going to a 20yr note (23yrs left, 5yrs into a 30yr note) .
Salesman tried to push a conventional note (higher cost, appraisal, etc.) then a 15yr note which was unacceptable because the payments would have been too much, given the current economy (and didn't account for the increase in the just received prop tax bill, or future expected increases) . At first look, the GFE for the 15yr note ("mistakenly " sent instead of the 20yr GFE) ...until we did the math and figured out that they "forgot " to include the PMI payment (though the GRE said it was included in the 'estimated ' payment).
I'm beginning to form the opinion that the HARP program is a scheme to put More money into lender's pockets faster (by resetting amortization schedules) (including Fannie & Freddie), poorly disguised as "helping" the consumer.
In the same post you mention that the loan was kicked back because it triggered an anti-predatory lending red flag, and then you call it a scheme designed to line lenders' pockets.
Which one is it?
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Quicken...sold my loan right back to CENLAR
