Lenders will have a keen interest in trying to salvage as many loans as they can. Yet there seems to be a fairly substantial number of homeowners who might be eligible to refinance under HARP but have been told they’re not because either Fannie Mae or Freddie Mac says they don’t own the loan.
Only that might not be true. It could be that Fannie or Freddie simply has the wrong address on the property. But fixing what’s on the surface is a simple typographical error isn’t as easy as changing an address on a magazine subscription, at least as far as one of the two government-sponsored enterprises is concerned.
I should know. I recently refinanced my seven-year-old mortgage through HARP after several years of being told by Fannie Mae—as well as several lenders, including the one that serviced my loan—that my loan wasn’t eligible.
But if an originator is dogged enough and willing to take the time to find out what’s wrong and get it fixed, the deal can get done.
In order to qualify for HARP, a borrower's loan must be owned by Fannie Mae or Freddie Mac and have a note date prior to June 1, 2009. Any homeowner can check the eligibility of their loan on Fannie or Freddie’s websites or call their servicer. The lender doing the refi should also be able to find that out.
Unfortunately, if the address on the loan is even the slightest bit different than what the GSEs have, you may be told you’re out of luck.
My servicer told me that Fannie Mae owned my loan—after all, they should know, since they’d been sending monthly principal and interest payments to Fannie for the past seven years. Yet Fannie’s website kept telling me they didn’t, and when I called the agency and spoke to a person, she told me the same thing.
The reason, I later found out, was simple: the address Fannie Mae had for my house didn’t match up with the one my servicer had (in fact, it wasn’t even close). But fixing it wasn’t that easy.
“One of the most important pieces of information is the property address, and it must match the exact address of the loan when it was sold to Fannie/Freddie,” says Patrick Ruffner, branch manager at Guaranteed Rate in Chicago. “Something as simple as a condo being listed as Unit 512 rather than #512 can result in the system identifying this as a loan that is ineligible for HARP.” I happen to live in a condo with a unit number.
While an instance like this should be an easy one to correct, Ruffner says, Fannie Mae doesn’t always address the issue in a timely fashion.
Fannie has a “support team” that meets just once a month at the end of the month to fix issues like this, Ruffner says. But if the support team doesn’t get around to fixing it on that day, it gets pushed into the following month. That leaves the borrower “stuck in limbo” and unable to move forward until it is fixed, potentially costing the borrower a lot of money if, for example, the rate lock on the loan expires in the meantime. Or in my case, paying an above-market interest rate for several years.
“There definitely isn’t a sense of urgency,” says Paul Anastos, president of Mortgage Master Inc. in Walpole, Mass., which did my refi. “They make it much more difficult than they need to. Any time there is something like an apartment number that’s slightly off can wreak havoc in terms of refinancing or purchasing a home.”
I called and emailed Fannie Mae several times for comment but it never responded. For its part, Freddie Mac says it takes about a week to make “post-funded data corrections” like this, and they can be done at any time of the month.
Anastos says lenders don’t always know themselves that a bad address is causing a loan to appear that it’s not eligible for HARP. However, with loan volume scarce, it would appear to behoove originators not to take “no” for an answer and find out what the problem is. It’s also just good customer service.
George Yacik has been covering the residential mortgage business for more than 20 years and writes frequently for industry publications. He can be reached at email@example.com.