Profile picture for daj555

Lender cold-called me to refi a 7/1 interest-only ARM

My lender (big one that is stable) called me out of the blue to offer a refi. Apparently I'm on a "list" which has
qualified me for such a call. My details: purchased home in 2005, $420K on interest-only 7/1 ARM loan at 5.625%. 79%
LTV, no 2nd mortgage, mid 700 credit score. I'm not crazy about it being interest-only, but I have not been putting
anything towards principal. I'm not behind on payments nor at risk of it (at least yet). Here's where I'm frustrated.
The offer sounded great - 5% rate and they would put in $ to bring loan to 417K and then some other magic involving
about 20K out of their pocket that I didn't quite understand - all amounting to a $50/month increase. After a few calls
and talking to my wife I said lets go ahead with the pre-approval - he was going to bring it to the approvers
(underwriting?) and would call me back. So of course, I get the wife all worked up, and he calls back and says it
didn't fly. It's now $250/month more. WHat gives?
Other questions:
1. This list, is it because I have a non-conforming loan they want off their books? It was presented to me as a win-
win. If so, do I have any leverage?
2. While he mentioned it was the biggest difference he has seen (off this "list"), that is, between what he proposed and
what they approved, I still feel like it was some type of bait/switch ploy. Should I be concerned or should I contact
their customer service?
3. Is this common and I should just shutup (don't look a gift horse in the mouth) and wait for a call back when the deal
materializes?
4. Should I wait for rates to lower a bit and call them? That was his suggestion. Or should I just stay in my loan for
now and not worry about it?

Thanks for your help. New here, so I'm sorry in advance if I violated any protocol.

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October 02 2008 - US
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Replies (40)

The new loan is amortizing.. none of your others were...  Is the new one 30 years??

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October 02 2008

David,

 

It sounds fishy to me, if you are on time with your mortgage I can't imagine that they would be willing to forgive debt.  Depending on what state and town your property is located in the Conforming loan limit of $417,000 may be higher.

 

The lender may be trying to refinance your loan to make the loan saleable to Fannie or Freddie.

 

Any chance this offer from Countrywide of Wells?

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October 02 2008
Profile picture for daj555

Yes 30yr fixed.

 

Sorry about the broken lines, must have been the copy/paste.  Is there an edit function?

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October 02 2008

Sounds like he didn't lock your rate and when rates went up, so did your payment.  Did he ever tell you what your rate was or if it was locked?

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October 02 2008
Profile picture for daj555

Okay, the lender is Chase.

 

Jason, this happened 2 days ago all within the course of about an two hours.  He told me 5% and that I should decide soon as the rates could change the next day.  I assumed he was getting it locked when he was going to talk to his approvers. 

 

I did feel like it was like buying a car - he was the sales guy and had to take the deal to his sales manager, to use an analogy.

Thanks.

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October 02 2008

Sounds like they started amortorizing your payment 4 years to soon.  Which does not seem kosher to me.  You should have 4 more years as an interest only and my suggestion with limited knowledge on the circumstances would be to take the $250 a month that you would be paying on the new plan and just pay down the principle under the old plan.  I missing something though with the $20k the bank is shelling out???

 

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October 02 2008

Are you sure it was chase calling?  It sounds like a telemarketing campaign, like the mailers you get in the mail that make it look like your lender but in fact they are just using your lenders name to gain trust...

 

I don't get the forgiving $20,000...

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October 02 2008

Sounds like a combination of what Andrew said along with the loan officer just trying to get your attention and then changing the situation once he has it.  Bait and switch like you said.  

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October 02 2008
Profile picture for daj555

More info:  home is in south florida.  $417K was described to me as the conforming limit.

 

As mentioned, it was presented to me as a win-win situation, that they were removing interest-only loans and his intent was to do so and keep my payment relatively the same.  To get into 30yr fixed at 5% at same payment sounds pretty good to me in this state of the economy.  Regarding the $20K (actually closer to 22K) it was presented to me that it was costing them 5.25 points (times the 417K) to get the rate to 5% and my payment almost the same.  When he came back that was now 5.875 points and hence about $250 more per month.  Now not attractive to me.

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October 02 2008

Andrew- I think you are on to something. There is a 'lender' up here that calls and says they are CITI (or whoever YOUR loan is actually with). It is just to gain trust, and I am sure if it were Chase, they would leave them alone! A paying borrower that is in an interest-only loan??? They love you DAJ, they don't want you to refi.

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October 02 2008

 I would say no as I imagined you have not signed anything regarding this.  It is not your responsibility to manage their money.  Start paying extra money towards the principle so when the time is right FOR YOU, you can refinance without worries.

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October 02 2008

Hopefully Marty chimes in again, he is in FL, and it might ring a bell.

 

I agree Andrew, it's a telemarketing thing.  Funny, I got a call myself, within the last 30 days, something similiar to that, although we are right at the conforming limit, current on payments, have equity, but have an Option Arm, they tried to refi' us out of the Option Arm into a 30 yr fixed at a rate of like 5.125% with no closing costs, including title, appriasal, all of it!  We have just shy of 4 yrs left on it, and they were willing to pay the PPP which ends in Sept of next year. If I recall though, it was some national broker, not direct lender.

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October 02 2008

daj..

 

YOUR LO is a piece of work (GARBAGE)...5% would have been modification type terms.... REFI at 5% would have been a miracle for a 30....  Yes, the rate is really around 6%.. Ask him to "churn butter" until the rates become low enough worthy for a REFI.  As jcaf,,, start getting into the swing of "paying" for your mortgage and the "shock" will not be that great.  Also,  a REFI will not be glamorous in payment differential when there is amortization schedules involved, unfortunately, but that is reality.  CHASE tried to churn you... sad.. those are the tactics/threads we have seen about Countrywide for the past year.  Sad that it has possbily reached them as well... FYI,,, your rate is great already... just start paying and just remember that this LO does/did not care about you or your situation or he would not have been so wrong... What an idiot!  Keep rockin' and we are here to help!!

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October 02 2008

It sounds like a bait and switch by a telemarketing compain.  Do beware.  I hope you have not paid anything upfront yet...

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October 02 2008
Profile picture for daj555

Thank you all for the valuable advice and comments.  I have called this guy's callback number and the number from caller ID and by all appearances, it is really Chase.  I even reached an operator who confirmed it was their Columbus Ohio location and gave me the executive complaint line. 

By the way, all closing costs covered by them was also included.

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October 02 2008

Doesn't matter.. Any LO could get you that deal.....Forget the complaint line with them... The only thing truthful was the first number in the rate...5... you thought 5.0.... they came with 5.875 points.. It's almost like a magic card trick with 5's.. You have 5.625.. wanted 5... cost 5.25... now 5.875.  I think I'll play 5-5-5 for pick 3 tonight.  That deal is only worth it to the LO.... PASS!!!!!!!  You are OK just the way you are.  If and when the time comes... you will get real help and assistance.  We just ripped through a similar Country"bumpkin"wide deal 3 weeks ago and the only thing we didn't see in the quote was a:

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October 02 2008

It is not unusual that it is Chase is calling you. Their retail division has always contacted the FHA loans I did with them in the past. Regardless of the disappearing money it would take to get you to a conforming loan limit, it was always going to be $269 higher per month. Your I/O payment now is $1968.75 and their proposed P and I payment would be $2238.54. Sounds like an amateur in the retail division just trying to create a refi. Note: ALWAYS MAKE THEM SEND YOU A GOOD FAITH ESTIMATE so you can see what they are trying to do, not what the slick talker is saying he can do.

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October 02 2008

I have a new LO who came from Chase and he was with them for 6 years.  I've essentially had to re-train him because he was purely an order taker.  I have a feeling that's kind of how the big boys go about loans in general.  Make the call, get the hook and make the deal work after the mess hits.  Of course, the majority of folks seem to prefer refinancing using this method, which is unfortunate. 

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October 02 2008

Did you by chance recently have your credit pulled from another mortgage lender or for another major purchase like an auto loan? That can also trigger a pull from their portfolio retention.

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October 02 2008

Lenders can also get 'leads' from different companies, they specifically target a specific area, loan program (ie conv, ARM, etc),  rate, owner occupied, non owner occupied, etc.  The leads provide contact info, from full phone number and address, to just phone number and just address.  The lender may request 10000 leads, and out of the 10000 leads, may narrow it down to those with just phone numbers, boom, there go the cold calls.

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October 02 2008

I don't understand why everyone is so skeptical here that this is telemarketing.  What would they gain here by making up some crazy offer that could never get done.  Obviously this person wouldn't do a loan if it doesn't have benefits.

 

As the poster explains, the current loan is unsalable on the secondary market as it is non-conforming.  Chase stands to gain by taking a small loss now to convert this to agency paper. 

 

The paper is worth maybe 50-60 on the secondary market scratch and dent, and at 417K re-written at a below market rate (to incentivize the consumer) it is worth maybe 97.  Big gain for Chase.

 

I would suggest to pursue it further and if they stick to the terms offered verbally to get it done.

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October 02 2008

SDL,

5% fixed with 5 points is how it started, not 5%  no points.  Has 5.625% currently

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October 02 2008

MW, 5 points paid by lender is the proposal as stated.  Surely they don't expect the customer to write a check into closing for 25 grand!!

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October 02 2008

I just think the "phone conversation" and reality are 2 totally different things.  I just have never heard CHASE offer 5% to pick up the tab and unfortunately I believe 2 things:  The LO is a POS, as stated and 2) the Borrower "wanted to hear" 5% FIXED and  "magic" of $20,000 principal reduction as well... It just doesn't make sense.  Unfortunately, the LO should have left that loan alone as it is just fine, plenty of time and can't be touched with today's market conditions. The only reason he called.... the only was 3 letters A   R  M...  Not jousting with you JS, it is simply impossible that the deal was laid out like that and will ever be honored in today's market.  Eating 5 points and $20K for the team (well over $40,000 loss for CHASE), seems very odd to me.  Keep rockin' and David, just keep making your payments and you will be guided correctly by people here.  The "phone officer" you spoke with is either dumb or deceitful... 2 more things I do not want hanging on my marquee.  Keep rockin'.

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October 02 2008

SDL,

 

Skepticism because Chase currently has more than 400 REO properties in the State of Florida that they will be taking losses on...who knows how many more are heading in that direction.  What kind of business plan is it to contact good paying clients and take $20,000 loss that you wiould likely never take if they simply didn't call.

 

It simply doesn't add up.

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October 02 2008

AA,

 

Chase here has a $420,000 "asset" that is unsalable and worth maybe 200,000 on secondary.  They can convert this to $400,000 salable asset.  That is $400,000 actual dollars to add to their balance sheet.  Cash is Cash.

 

I think it was Martin had posted recently about very severe guideline changes that Chase was implementing in Florida.  They obviously want out of the market, and this is a step in that direction.  Just my opinion...

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October 02 2008

Couldn't they simply pay the principle down $3,000 and make it a salable asset rather than re-write the loan at a huge loss?

 

Serious question, not trying to be a wise azz,  Not sure how seasoned mortgages can be packaged and sold.

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October 02 2008
Profile picture for Rob Cochems

AA,

 

It needs that govy stamp of approval to be worth something again.  So they have to re-write and get the approval.

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October 02 2008

I think it was simply a churning REFI call, that's all.  PHONE OFFICER "scares the borrower with the ARM pitch... to get to fixed...  It's simply the mirror image of how it was sold the first time.. When reality was that the "bill" was being paid by the borrower, he/she figured they were simply being churned.  Nothing more...nothing less.  Has nothing to do with Wholesale changes... just a dark room in CLE OH making phone calls to a list of ARM borrowers.  Simple stuff.

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October 02 2008
Profile picture for daj555

Martin - just to clarify.. I'm quite clear on what he told me - 5% and they were reducing principal to 417K.  The part about 22K was explained to me by this LO that it was costing them (chase) that amount of money to take my loan to 5% and 417K, and keep me at only a small change to monthly payment.  As though they were winning and I was winning.  I think you and SDL make good points - SDL in that it was implied to me that Chase had me on this list of non-conforming loans (don't know if it was because it is I/O or because it is jumbo but so close to not being jumbo); so it makes sense to me that they want to get me into a loan that looks better on their books or is saleable, as he states.  Is it possible that both points are right?  I'm on this list for said reasons and this particular LO got my name and performed poorly?  He offered 5% knowing he couldn't deliver and the approving dept came back with something different, i.e. $260/mo. more.  Is the "approving dept" part all bull and he talked to the wall and then called me back?  Thanks again.

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October 02 2008
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