Unhappy Obama refi plan experiences

Tuesday, April 14
Posted 2 p.m. EDT

FRUSTRATED: Will the Home Affordable Refinance program get off the ground? Maybe not, if readers' anecdotes are a guide.

Yesterday, I asked readers to describe their experiences with Home Affordable Refinance, the part of the Obama foreclosure reduction plan that is supposed to allow people to refinance their mortgages at up to 105 percent of the currently appraised value. I haven't heard from anyone who has had a happy experience.

One reader has a mortgage with Countrywide and found a page on the company's Web site that says Countrywide "will serve our largest segment of eligible customers -- those who do not have mortgage insurance on their current loan. Additional borrower segments will be included as systems are ready."

This reader says: "I am one of those customers with mortgage insurance. I used their 'Contact Me' link to request a call, and found they say they will be contacting me in a few months."

A few months.

Another Countrywide customer says the lender is trying to push him into getting an FHA-insured loan with high upfront fees and mortgage insurance premium. This borrower doesn't have private mortgage insurance. Under the Home Affordable Refinance plan, he's not supposed to have to get mortgage insurance, even though his loan-to-value would be above 80 percent. That's one of the Obama plan's selling points: With a Home Affordable Refi, you don't have to buy mortgage insurance if you didn't have it already. So why is Countrywide trying to force him to refi into a loan with government mortgage insurance? (That's what the FHA is.)

In yesterday's post, I speculated that mortgage servicers are dragging their feet for political reasons: To frustrate Obama's plans and to derail a bill to allow bankruptcy judges to modify mortgages. A lender told me to, basically, take off my conspiracy cap. It's too tight and restricting the flow of blood to my brain.

"I can't speak for all mortgage lenders, but we're so completely buried with refinance business, there just isn't time to even *think* about how we're going to handle MHA," he writes.


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