On the House: Endless roadblocks to refinance

I recently wrote about a couple who were invited by their lender to refinance the mortgage on their Delaware beach condo, then were made to jump through an extraordinary number of hoops. The fact that the borrowers were two women made the requests even more curious.

But it appears from readers' response that what the women went through is the rule, not the exception.

Every day, I hear from borrowers at the edge of disaster. I am appalled how the financial system contributed mightily to many of their plights by encouraging them to borrow beyond their means. I also understand why the system might be wary of further dealings.

Yet the couple I wrote about were not at the edge of disaster, nor are the people I write about today. These people are not in trouble by any definition, and don't merit such treatment.

Take Jan O'Rourke of Ardmore, who called her lender, National City, in August to refinance her Sea Isle City condo loan, hoping for a shorter term and to save money.

The latest request "in a long line," O'Rourke says, is "to increase 'Coverage A' dwelling limit on the homeowner's policy on the condo."

The lender "wants it to be $66,000, or 20 percent of the appraised value," she says. "I object because the dwelling is insured under the condo master insurance policy," of which the lender has a copy.

When she asked a lender's rep if this request would be the last, the reponse was "no, she could not guarantee no further requests."

O'Rourke canceled the refi.

Haddonfield architect Thom Wagner says he had the same experience with Bank of America in 2008.

"My 60-day 'no doc' refi on my Shore house took seven to eight months, with more 'docs' than I ever thought possible," he says. Although his credit rating exceeds 800, "they wanted all kinds of info on my Haddonfield house, proof of insurance payments, taxes, and value, including an appraisal they originally did not require."

Anita Lynn has been with Chase for 12 years and has the mortgage payment on her Bala Cynwyd condo automatically deducted from her checking account, so she's never been late with a payment. Impeccable credit, high salary, no revolving debt.

She decided to refinance to lower her interest from 6.25 percent and cash out a bit of equity to improve the unit.

"Though polite, the customer service was awful," she says, citing long delays between supplying details and Chase's confirming receipt. In fact, a delay in Chase's obtaining insurance information caused the lender to reject the application at first.

Now, Chase has conditionally rejected the loan because the "condo association doesn't have the proper amount of flood insurance, which is $1 million more than the federal government" requires.

There's no way the condo association will raise owners' assessments $7,000 more a year, so Lynn believes her refi is dead in the water.

Though she backs lending standards higher than the "slipshod" ones that resulted in the housing downturn, Lynn said, "the pendulum has swung wildly in the opposite direction."


Contact Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.

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