Is it not surprising that even after months of passing the Making Home Affordable Act, hundreds of thousands of people are still not able to refinance? According to the government figures last week, only about 4 percent of the people who applied for a mortgage refinance were able to get a new mortgage. The rest 96 percent are still waiting due to procedural delays.
Why Is It Still Difficult To Refinance?
There are still many people who would want to refinance, but have not been even able to submit their request for refinancing their mortgage because either their mortgage is not guaranteed by Fannie Mae or some other criteria that makes them ineligible for now.
As a matter of fact, I am one of those whose request for refinancing has been pushed back for one reason or the other. The broker locks up a rate for me, and the application is not approved by the bank for some lame reason. Going to another bank is not easy, as the other bank might restart the process for credit checks and that itself would bring down my credit score even further. During these hard times, that is not an option either. Even the current bank my broker is working with, had checked my credit history about 6 weeks ago after which I had paid of my line of credit. Since the bank has the old credit report, it still thinks I have the line of credit open even though I have submitted letters stating that the home equity line of credit has been closed.
Are these just actual procedural delays or are the banks trying to be too cautious? Sometimes it feels they are just looking for reasons for not lending out any money. I think President Obama was right to pressure the leading banks to get aggressive and lend more. Unfortunately, the banks might take those words wrongly and start the same kind of lending that caused the whole financial crisis in the first place.
Let us see how the scenario unfolds in the coming week after the presidential pressure on to the banks. Every day I feel more and more that my refinance approval is also just being held up intentionally by the bank.
