Chase Home Mortgage Forces Me To Sit On A Time Bomb
COLUMBUS, CALIFORNIA -- I've been trying to refinance a mortgage, a no-doc, 7/1 interest-only ARM at 5.375 percent, from Chase, which readjusts in August 2012. I'm trying lock in a 30-year fixed-rate conforming loan that ensures I'm able to keep the property until its paid. I'd rather do this now instead of wait until 2012 when rates may be higher. Current monthly payments are at $2,248.
Due to falling home values, however, a large part of the 20-percent equity I initially put down has been erased. Whereas the home was originally appraised at $580,000 in 2005, the Chase blanket-appraised value is now $495,000. In 2005, I put down $116,000, financed the remaining $464,000 and that balance now stands at $461,789, leaving just $35,211 in equity remaining. However, I believe that a full appraisal will determine that my Redondo Beach, Calif., property in fact is worth substantially more. But a Chase mortgage counselor informed me on 22 January 2010 that I'm not 'streamline eligible.'
Though I'm experiencing no crisis, I consulted with an independent mortgage-crisis counselor to explore what I might do to improve my ability to qualify. They informed me that my chances are nil - unless I want an FHA loan with PMI, which I don't, or unless I experience a crisis (missed payments, default, possible foreclosure, etc.), which compels the bank to take some action. I don't care for that option either. I'm not looking for a rescue.
Why is a responsible and sophisticated financial consumer, such as me, forced to choose between those two equally undesirable options? Unlike many these days, my finances are in decent shape. I asked Chase to consider my:
- Good credit: my FICO score is in the 790-800 range;
- Timely repayment history: I haven't missed or been late on a payment to any creditor in many years.
- Property improvements: we made substantial upgrades to the residence. Additionally, our HOA invested nearly half a million dollars in improvements to the complex;
- Equity: we're not underwater. In fact, property values in my neighborhood are stabilizing;
- Higher income: my income today is roughly $20,000 more than it was in 2005;
- Greater personal savings: despite the financial crisis of 2007â2009, my retirement accounts all have higher balances than in 2005;
- Lower credit balances; again, despite the crisis, I've paid down my balances. All my credit balances trend downward historically;
- Financial savvy: as a successful, independent, institutional asset-management marketing consultant, I treat my assets and liabilities as an institution might. I've been a long-term consultant with a leading financial firm since 2001 and this gives me access to large amounts of sophisticated and forward-looking financial insight, which I put to use in my personal life;
- Income property: I also have a tenant who covers the mortgage on a second property in Hermosa Beach, Calif., which is due to be paid off in nine years. This provides tax benefits, but unfortunately impacts me negatively on my mortgage application.
I'm certain I represent extremely favorable credit risk to any bank that works with me to refinance this loan. Further, it would enable Chase to remove a risky, 7/1 interest-only ARM from its books and replace the loan with a safer 30-year fixed-rate loan to an AAA-type borrower with the capacity and intention of repaying the obligation - which might look good to regulators. If Chase offered me a rate at or near 5 percent, without PMI, it would increase my current monthly payment amount by only a few hundred dollars, which is very manageable.
Chase Home Finance has denied my refinance application and basically is penalizing me for being a proactive borrower who's working to prevent a potential future problem with my home. They're forcing me to roll the dice in 2012 and hope that I can refinance or sell by then. Apparently, no one at the bank has the foresight or the authority to look more closely at my unique circumstances, do some community banking, make a sensible move, and offer me a refinance. As a result, I have to continue sitting on this 'time bomb' of a mortgage.
As a consumer, evidently all I can do is complain loudly and often.