Although Independence Day 2012 is now part of history, Palm State Mortgage continues its daily commitment to celebrate the American heritage of fairness and free enterprise. We caution you, some of the Big Banks might not give you these “every day ethics.” This idea brings us to the subject of today’s blog, and if you are planning to re-finance your home loan, this might be the most important consumer information you will find.
If you are shopping to refinance your home, even if you are using the HARP 2.0 program, you must be aware of these four factual conditions in today’s changing mortgage market:
1. The HARP 2.0 Program: Where the Heart Is… HARP is a program in which the government assists homeowners with low interest rates to reduce monthly mortgage payments. The unfortunate side-effect is that some Big Banks,(and you know who they are), have taken advantage of the program for Big Profit. The Wall Street Journal recently projected that the Big Banks could make as much as $12 billion this year by refinancing the HARP mortgages under this program. This profit is not the purpose of HARP. It was designed to help homeowners re-finance. (See more details about this program by clicking here.)
2. Big Bucks For Big Banks: Why? Put simply, the Big Banks can cash in on these loans because of the HARP rules that simplify the borrowing process if you, the consumer, re-finance with your existing lender. They seem to make it a little easier on the borrower than the process of shopping around for the best rate.
Shaun Donovan, Secretary of Housing and Urban Development told the U.S. Senate recently, “For borrowers, “Whoever holds their current loan, whoever is the servicer, they can charge them–and we’re seeing this–very high fees.” Palm State Mortgage warns you, the easy way might not be the best way. (To read about how the Big Banks responded to the research in this blog, click here.
3. Truth In Lending: Who Do You Trust? Some Big Banks have even been charging up to a .53 % point more than the market rate on refinanced mortgages. Pearl Lefkowitz, owner of Palm State Mortgage Company, located in Orlando, stated, “Many Big Banks have many current borrowers whose loans they are servicing and these borrowers call them first.” What the Big Banks are doing is legal, but it does not seem to be ethical. Pearl Lefkowitz added, “They cannot handle the volume and have the opportunity to charge the borrowers rates higher than the going current rates.”
Some Big Banks are adding insult to injury. Lefkowitz state they “make more money when they sell the loans to Fannie Mae and Freddie Mae, the higher the rates are.” Although every case is different, the recent average for a 30 yr. fixed rate loan is 3.71.
Compare this to a recent quote from Nomura analyst Glenn Schorr, “Borrowers would certainly prefer a 3.75% mortgage, but they will happily take a 4% or 4.25%, or even a 4.5% loan as well.”
4. Caution: Do Your Homework! We of Palm State Mortgage pledge to help you find the best possible rate for your refinancing situation. Pearl Lefkowitz stated, “The lesson to be learned is that borrowers should still shop for the best rate, even if they are doing the HARP program.” After all, HARP stands for Home Affordable Refinance Program.