I recently applied for a refinance loan with our current lender and were approved. We completed all of the

Asked by Danielle, Lititz, PA Fri Mar 13, 2009

application, sent them all of our documents and they sent us a copy of our loan documents to sign and send back. We paid for our appraisal and the night before the appraiser was to come, the lender called and said that they overlooked a new law regarding homes that were purchased less than 12 months ago. They are claiming that they won't complete our refinance (even though I have all of the documents from them already). Can they do this even though I have all the documents to prove that we were approved and well into the refinance process. The lender currently holds our mortgage and was well aware the we only purchased our home 6 months ago e. But now at the end of the process, she realized she made a big mistake in her terms. Do I have any legal rights to get this refinance or at least make them lower my rate to what I was quoted if they are legally not allowed to refinance it? Please help! This would have saved us $200/month (almost 2% lower rate than our current mortgage rate)

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Kellie Saari, , Las Vegas, Las Vegas, NV
Wed Aug 11, 2010
The challenge is the lender. You may refinance a loan after 6 months of ownership. However, they do reserve the right to lend or not lend to whomever they choose. I would call the manager in the branch and demand any money you have paid out back and go to another lender.
1 vote
Eileen Musser…, Home Owner, York, PA
Mon Mar 16, 2009
Have you tried calling the local office directly? Maybe someone else can help you?
I would Google 'Wells Fargo Lancaster Pa' to find contact informaiton on other team members.
0 votes
Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Mon Mar 16, 2009
Lending answer:

You're not having an issue witha "new law" but an issue with Wells-Fargo's internal guidelines - assuming that you are conducting a rate/term only refinance.

1.) Fannie Mae and Freddie Mac, the entities which purchase the majority of loans from banks, require that a homeowner be on title to a home for at least six months to be eligible for a "cash out" refinance transaction. Cash out would include paying off a second mortgage (eg Equity Line) that was not used to buy the home, paying off old taxes, or paying off any debts that are not the original purchase money mortgage.

2.) Many lenders, including (I believe) Wells-Fargo, require that the lesser of the current appraisal value or original pruchase price be used if the home owner has owned the home for fewer than 12 months. The appraisal vaue at time of purchase is irrelevant.

3.) Only an underwriter may issue a loan approval and a commitment to lend on behalf of a lender. "Approvals" issued by a loan originator are not binding on the lender and are, unfortunately in your case, not worth the paper they are written on. It is not uncommon for a loan originator to promise an "approval" to a borrower only to have that promise overruled by underwriting. If Wells-Fargo is one of the lenders which requires use of the lesser of appraised value or purchase price for refinances within 12 months of purchase date, your loan originator at Wells should have discovered that problem in the first two minutes of your conversation. Date of purchase is the 7th question asked in Section II of the Universal Residential Loan Application (Fannie Mae Form 1003).

4.) It is highly unlikely that Wells-Fargo currently owns your loan (they are probably just the servicer) and thus has little authority to modify your existing terms. It might be possible, if your loan is owned by Fannie Mae or Freddie Mac, to have your loan modified under one of their programs if you meet the qualifications and requirements.

Your best bet is to shop around for another lender.
0 votes
Danielle, Home Buyer, Lititz, PA
Sat Mar 14, 2009
In response to Elieen, we curently have our mortgage with Wells Fargo, and this is the company I was using. I completed their online for for refinancing through their site and was referred to their local agent. She barley knew english, but was giving me a much better rate than another other lender could offer.

In response to Luke, the "new law" they are referring to is this: We purchased our home about 6 months ago, we paid $220,000, but it assessed at $228,000 at that time. To do this refinance, we were going to put our closing costs back into our mortgage amount. To do this and stay away from PMI, we needed our assessment to come in at or above $228.000. If it did, which I am sure it would, we would have no problem keeping the PMI out of the payment amount. We were going to finance a total of $181,000. They are saying that this new law says that if you have purchased your home within the last 12 months, you must use the purchase price as the "assessed price" when you refinance rather than the actually assessment. Therefore, the lender should not have ever scheduled an appraisal (which we paid for and scheduled prior to her realizing her mistake). If we had to use our purhase price as the assessment, we would have ended up paying the PMI and would not have saved enough each month to justify the $7000+ closing costs. I tried to explain this to them, but she told me...and I quote "This is not a life or death situation". But for us, it meant an extra $200 in our pockets each month. That is significant! Approximately $65,000 over 30 years! So we lost $65,000 due to her overlooking this law. We have gone through all of the paperwork for over a month now for her to just now realize her misake. We had our hearts set on this new payment and not due to her mistake, we can't get that rate. I AM SO FRUSTRATED! Shouldn't the lender have to honor the documents I have? They already own my loan. If the legally can't refinance it, they have the power to adjust the rate to what I was quoted. Please give me your feedback...Thank You!!
0 votes
Eileen Musser…, Home Owner, York, PA
Sat Mar 14, 2009
Because of the experience of several clients I have worked with, I STRONGLY recommend that you work with a lender who has an office and a very strong presence in your home area. It can be a nationally known company like Wells Fargo, or a more regional or even local lender.

Why? When you have a problem like the one you are experiencing now I like to be able to get nose to nose with someone who has the power to help. At least figuratively I want to be able to get my hand on their collar and twist a little if necessary!

Do you mind telling us what company you have been working with?

Sometimes when you get on the internet and go for the "best rate in Texas" you set yourself up for trouble in the long run. I also find that the local lenders often end up being the best deal when you consider service, fees and charges.

JUST MY OPINION. You are welcome to contact me if you want some names of lenders who have done a good job for my clients here in Central Pa.

Eileen's Green Team
0 votes
Terrence Cha…, Home Owner, Allentown, PA
Fri Mar 13, 2009
I am in agreement with Luke. Tell them if you don't get re-financed, then you'll go elsewhere.

Terrence Charest, e-Pro
0 votes
Luke Allison, , Asheville, NC
Fri Mar 13, 2009
Danielle-
I re-looked through all of our guidelines and I cannot see any rule that prevents your from refinancing your loan as a rate-term refi. The only rule I can see would be that if you did a cash-out refi, then both Fannie and Freddie require you to be on the loan for 6 months. I have a feeling that I know why you got the turn down and I don't think it has anything to do with you - I bet it has to do with your lender/loan officer and them refinancing their own customers. I know it was probably very easy keeping all of your eggs in one basket and doing the refi with the same bank but I think in this instance, you need to go with a new lender. I don't mean that as a solicitation, just the honest truth.

I would be more than happy to assist you but it is only fair to tell you that you should be okay as long as you go to another lender other than your current one.

Luke Allison
Flagstar Bank
828-777-8828
Luke.Allison@flagstar.com

Apply Online: flagstarloans.com/lallison
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