- The Washington Times - Thursday, July 15, 2010

With mortgage rates remaining at low levels, inquiries about refinancing continue. While it’s true there is a smaller pool of folks who are eligible for a refinance due to a decline in property values, tighter credit score requirements and other factors, the fact remains that there are still plenty of folks who can save some money.

Be forewarned, however, that your loan officer is likely to turn you into a circus bear in order to get your refinance in the coveted “clear to close” status. As I have written many times in recent columns, mortgage money is cheap and available, but expect to push some paper, dance, sing and jump through hoops to get the refi closed.

I owe my processors a debt of gratitude for getting my loans to closing. I spoke with my two assistants, Bernadette in the Alexandria, Va., office, and Erin in the Charleston, S.C., office and got an earful of the kind of nonsense they put up with to get a loan closed. Here’s a sampling of recent underwriting conditions we have experienced:

• An underwriter delayed an approval because one of the multiple disclosures signed by the applicant contained a date she said was not legible.

• A borrower refinancing his loan held by Bank A had to provide a deed, a letter from Bank A and other documents because the original loan was held by Bank B. A simple Internet inquiry shows that Bank B was purchased by Bank A in 2008, which should have satisfied any questions. Despite the fact that the lender is covered by title insurance, she required excessive paperwork to prove what was obvious.

• An approval was delayed because the ages of an applicant’s children were not listed on Page One of the application.

• The standard application requires the borrower to answer several questions and attest that the answers are true. One of the questions asks whether the property is the applicant’s primary residence. Back in the day, this was sufficient proof and certification that the borrower is telling the truth, as it’s a felony to knowingly put false information on a loan application. Today, borrowers should expect to sign at least two more disclosures certifying that the property is owner occupied. Some lenders also will request a utility or telephone bill to further prove owner occupancy, even though the file may already have bank statements and W-2 forms that indicate the applicant’s name and address.

That all of this is overkill is an understatement. It’s up to Bernadette and Erin to shuffle this paperwork and get the loan approved before the lock expires. Luckily, our clients understand that the days of easy mortgage money are long gone and generally are very helpful in providing us with seemingly redundant and pointless paperwork to meet unreasonable demands.

But rates are low, folks. It’s well worth the hassle of going through the mortgage process to save a lot of money.

Henry Savage is president of PMC Mortgage in Alexandria, Va. Send e-mail to henrysavage@pmcmortgage.com.

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