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Can't refi because I didn't reaffirm mortgage!!

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  • Can't refi because I didn't reaffirm mortgage!!

    2/2/13 was 2 years since my BK discharge, and Tuesday I called my mortgage lender, Wells Fargo, to inquire about doing a FHA streamline refinance. My rate is rather high at 5.875% and my finances are much better than they were at the time of the BK, with my FICO score now about 670.

    Wells Fargo said I would have to reaffirm my mortgage before I could do the streamline refi, and to call my lawyer. I called them and they essentially said judges in our district pretty much never approve mortgage reaffirmations, and at this point I'd have to reopen the case. I read online that Wells Fargo does not have to require the reaffirmation, but I guess they do it to try to avoid a refi.

    I know it is advised to go into a new loan/reaffirmation with great caution, but I plan to be in my home for many years if not forever, and would like to be able to get some home energy loan programs against the title down the road so I can make improvements. Now I feel stuck.

    Anyone dealt with this? Advice?

  • #2
    Refinancing does not require reaffirming the loan you are attempting to pay off. If your current loan is through WF and WF is telling you that you cannot refinance through WF because you did not reaffirm the WF loan, WF is using this bogus reason as an excuse. Go find another lender.

    If the refinance is through the HARP program, escalate your request to the "office of the president" of the bank since, under the Government guidelines, the only bankruptcy related requirement is that the borrower is 3 years post discharge.



    • #3
      Thanks Des.

      I am only 2 years post discharge and was looking to do the FHA streamline refinance with my current mortgage lender, Wells Fargo. I thought it would be straightforward, but apparently not. I suppose even though the federal guidelines don't require reaffirmation but WF does just because they can put in whatever guidelines they want? Grr.

      I will look into HARP but I guess that requires 3 years? Not sure I'd qualify through another lender at this point but I can check.


      • #4
        The funny thing is. . . The issue you are facing with the idiots at Wells Fargo is, this very moment, a topic of discussion in my local bk attny "roundtable" discussion forum. The consensus is that WF makes up its own rules as it goes.

        As to HARP, three years post discharge is the requirement BUT, under certain circumstances (whatever they are), folks two years post discharge may "qualify". It does not hurt to try.



        • #5
          Jerks (thinking stronger words in my head).


          • #6
            Just go with another lender. It'll require the same paperwork regardless.


            • #7
              Hello - If your loan is FHA its not eligible under HARP - HARP/HAMP are for Freddie/Fannie.

              Harp strips the 3 yr post BK requirement - so if anyone has a HARP eligible refi they may need to educate their lender that the discharged B/K is irrelevant. Remember tho - HARP requires payments to be on time (on the home you are trying to refi) and even tho the mortgage may not be reporting post B/K they will still look at the payment history. Less than 30 day lates are not a problem. Greater than 30 days past due is considered a late.

              Payment History of the Existing Mortgage:
              *The existing mortgage must be current.
              *The lender must determine that the borrower has not had any 30–day mortgage delinquencies on the existing mortgage in the most recent six-month period, and no more than one 30–day delinquency in months 7–12.
              *The loan file for the new mortgage must contain documented proof from the lender's servicing system (printed after the date of the borrower's new mortgage application and prior to the date of the new mortgage note) that evidences the payment history requirements have been met for the required 12–month period.

              Credit Score and Credit Report Requirements:
              *Payment change ≤ 20%: no minimum credit score required. Lenders do not need to obtain a new merged credit report, but must obtain the representative credit score for pricing purposes.
              *Payment increase > 20%: minimum representative credit score of 620. A new merged credit report with credit scores is required. The representative credit score will be used for pricing purposes and to determine eligibility.

              Significant Derogatory Credit Events:
              *Lenders are not required to comply with the waiting period and re-establishment of credit requirements for significant derogatory credit events for Refi Plus loans.
              *In addition, Uniform Residential Loan Application (Form 1003 or 1003(S)) VIII, Declarations A through F are not required to be reviewed or considered in the underwriting evaluation as long as the credit score (if applicable) and mortgage payment history requirements are met.

              (edit: note a-f on 1003/application are questions such as - have you had a foreclosure, B/K, etc)

              DTI Ratio:
              *Payment change ≤ 20%: lenders are not required to calculate a DTI ratio.
              *Payment increase > 20%: maximum DTI ratio of 45%.

              Source: Fannie Mae Guide B5-5.2-02, DU Refi Plus and Refi Plus Underwriting Considerations (12/18/2012)

              As far as OP FHA streamline questions - as already mentioned here - just find another lender - preferably a smaller Mortgage Lender that specializes in just mortgages as they can work on your behalf with several lenders and find one that doesn't care about the Bankruptcy.

              HUD/FHA has several different ways to do refi's and you can read about them here if you are board.....

              Section C. Streamline Refinances

              (apparently I cant post a link - google search "HUD 4155 Section C. Streamline Refinances" and you will be looking for a PDF link under the website HUD DOT GOV - should be one of the top results)

              one thing to note:
              ***Except for credit qualifying streamline refinances, FHA does not require a credit report. The lender, however, may require this as part of its credit policy.

              Good Luck!!! You can get this done. You should be able to get something in the mid 3's +/- on a 30 fixed FHA streamline.


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