The Wall Street Journal reported this week on the struggles that homeowners across the country continue to face as they try to refinance their mortgages. This is an issue with which our Oak Park and River Forest mortgage foreclosure attorneys are intimately familiar. It s yet another hurdle faced by those throughout our area who continue to work hard to try to get their finances in order following the recession.
Like trying to talk to a real person when calling the cable company, residents are finding it difficult to even get a real conversation going with bank employees about the refinancing process. One man interviewed for the story heard something when calling Bank of America that is likely familiar to many local residents: the bank was “swamped with business” and might be able to call him back in two to three months.
This can be incredibly stressful for all local homeowners trying to take advantage of the particularly low mortgage rates—averaging 4.05% at the end of April. However, the increased demand for refinancing comes when banks own a larger share of the market than ever before. In addition, it comes as banks generally tighten standards, taking more care when figuring out who to lend money to and how to process their loans.
Experts advise that is it crucial to shop around. The bigger banks often boost their rates, because they have enough traffic that they can afford to demand higher rates and make bigger profits. The president of a smaller bank, Accunet Mortgage, explained, “It really is a rat’s maze for the consumer. [Big banks] have enough people saying ‘yes’ to those [high] offers that they’re taking super-high profit margins.”
One expert explained that “You have more loans going through a pipeline that is too small.”
Loan originations seems to be concentrating with larger banks more than at any time the past, particularly the nation’s four largest banks. In 2004 these banks—Wells Fargo, J.P. Morgan Chase, Citigroup, and Bank of America—originated about 38% of loans. Now, six years later, those banks account for 55%
Right now more than one-third of all refinance applications are coming amid President Obama’s Home Affordable Refinance Program, according to the Mortgage Banker’s Association. The program generally allows those with loans backed by Fannie Mae and Freddie Mac to refinance even without equity or particularly strong credit. The President continues to push for similar legislation to help underwater homeowners who have loans not backed by Fannie or Freddie. It remains to be seen if that legislative proposal will become
At the end of the day when it comes to refinancing, dealing with foreclosure, or working with banks on any number of home ownership issues, it is easy to get confused and overwhelmed. No matter what, please remember that help is available. Each Oak Park real estate lawyer at our firm is available to help residents throughout the area on these issues. Whether you’re hoping to reinstate your mortgage, modify your loan, arrange a short sale, or just learn what options are available, the Oak Park foreclosure lawyers at the Emerson Law Firm can provide the experienced legal counsel you need.
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The Federal Housing Administration Offers a Streamlined Refinance Program to Relive Homeowners of High Mortgage Payments