Friday, September 24, 2010

My Own Mortgage Story

It has been a while since I blogged.  I guess, I just got bored and took a break.  A couple of conversations in the recent past brought me back here.


I met a friend who works in the banking industry who told me over a dinner conversation that my experience with my house in Michigan is so far removed from what they talk about in their corporate meetings on the housing crisis.  My advice to them is to drive through the neighborhoods in Michigan and talk to a few homeowners.


Not that my experience is very atypical, the usual – bought a house in Michigan in 2003, paid a little more than what we should have, but nothing too pricey.  We moved from Michigan in 2009, could not sell the house and therefore rented it out to a family. The tenants are in bankruptcy but pay our rent on time, except for a few hiccups now and then.  We are just hoping that once the 3 year lease is over we can rent it back to them again or find someone reliable.  We have little hope of selling the house at a price that will cover our mortgage dues.


Well anyways, the story si that when we put up our house for rent in 2009, we had a deluge of applications.  However, most of the applicants were either bankrupt and/or did not have a regular job or were large famil.ies living on government support.  I finally decided on our current tenants because they were a dual income couple with three children and seemed generally nice and reliable.  They have been pretty good so far, they take care of our house and do not cause any trouble. So whenever they tell me they will be late in paying the rent by a month or two I don’t give them a hard time. I can wait if they promise me that they will pay eventually.


To spice up the story, my mortgage is on a 5 year ARM that is going to end in October of next year.  At the current rate, even if the interest rates reset I will be paying  a rate lower than my current rate.  My state in Oct 11 will depend on what the Fed does with the interest rates. 


I recently called Chase, the lender to find out if I qualify for any loan modification or refinance assistance.  Here’s the transcript:



After a lot of punching of digits to get to the right place:


Agent: Hi, Whom Am I speaking with?


Me: Girish Mallapragada


The agent follows up with a lot of security questions and verifies my identity. Then..


Agent: How can I help you Sir?


Me: I would like to know if I qualify for any refinance assistance.


Agent: Let me check….she takes a while, looks up the value of my house..


Sir, your house is valued at X..and your mortgage is Y. The loan to mortgage ratio is 130%.  It has to be below 125% for us to move on.


Me: I am ready to pay down some of the mortgage principal if I qualify for a refinance.


Agent: Let me check.  Sir,…actually even if you pay down we cannot proceed. 


Me: Could you please explain to me why I do not qualify?


Agent: Your loan is not guaranteed by Fannie or Freddie.


Me: I don’t know what that means.  Did I do anything during the loan process that lead to this situation?


 (I was pretending to see what she wud say)


Agent: No Sir, actually not.  See, Chase packaged loans into bundles of say, 1000 loans and sold it to investors. Some of these were bought by Fannie and Freddie. If your loan was in a package that Fannie and Freddie took from us then you would have been covered.


I was actually surprised that an agent would even give me that explanation. Usually, they have no clue what not qualifying means.


Me:  So you are telling me that I don’t qualify because of something that you did.


Agent: I wouldn’t put it that way Sir.  There is little we can do to help you now refinance, unless you opt for a traditional refinance.


Me: And, what do I need for that.


Agent:  Your loan value should be less than 85% of your house value.


Me:  That’s not going to be the case for another ten years.  Well, I guess that is it then.. thank you for helping me out.


Agent: Is there anything I can help you with?


Me: No, thanks. Bye bye.


1 comment:

Anonymous said...

you havent blogged for a while?
Certainly, its fun reading them!
Do blog when you get a chance.
Mortgage refinance story - have been in the same boat for a while!