My Mortgage Experience, Part 2

A few columns back I wrote that my wife and I were in the home stretch of refinancing our mortgage through the HARP program after several years of being told we weren’t eligible. Well, I’m happy to report that we closed on the loan a couple of weeks ago and now will be able to pay off our mortgage in half the time we would have been able to do under our old loan, saving tens of thousands of dollars in the process.

Unfortunately, we could have saved a whole lot more if we had been able to refi a few years ago, when HARP was first rolled out. If only I knew then what I know now.

In that earlier column, I noted that “one of the reasons we had trouble knowing if we were eligible for HARP was because it was difficult to know for sure if Fannie or Freddie owned the loan in the first place. You can use Fannie or Freddie’s website to check, but unless your address matches up exactly with theirs, you won’t get an accurate answer.”

It turns out I didn’t know the half of it. I had no idea just what a big mess an incorrect address really is and what lengths you have to go through to fix it.

While calling Sports Illustrated or Ducks Unlimited to correct your address takes one telephone call to a customer service rep, Fannie Mae requires a full “support team” to do this. And this “support team” meets all of once a month.

If you live in a condominium, like I do, or a co-op with a unit or apartment number, you’re much more likely to run into this predicament. And that can “wreak havoc in terms of refinancing or purchasing a home,” said Paul Anastos, president of Mortgage Master Inc. in Walpole, MA, where I got my refi. “It was a pretty big deal getting it changed so we could even do it.”

“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,” says Patrick Ruffner, branch manager for Guaranteed Rate in Chicago. “While an instance like that is an easy one to correct by updating the file internally with the lender refinancing the loan, there are instances that are more difficult to solve.” Like mine, apparently.

“The biggest problem is these updates are processed once a month at the end of the month,” Ruffner says. “The borrower is stuck in limbo until Fannie/Freddie have updated their systems. Therefore, the borrower will be unable to move forward with their refinance until this has been corrected. Depending on when the current servicer asks the agencies to update the address, this can take weeks up to months to be corrected.”

“If it is within the last week of the month, they may push this correction to the following month, thus delaying the process further. This leads to a borrower that is unable to lock in a rate and move forward with the refinance until it has been updated in the relevant system. In a time when interest rates are volatile and every day could result in an increase of those rates, this can put the borrower’s savings in peril.”

“There definitely isn’t a sense of urgency,” said Anastos. “They make it much more difficult than they need to.”

Fannie Mae told me repeatedly that it didn’t own my loan, although my mortgage servicer insisted (correctly) that it did. I put every variation of my address I could think of into Fannie’s search engine and repeatedly came up with nothing. I even called Fannie by phone and spoke to a human being who told me they didn’t own the loan. It turns out that the address Fannie had for me wasn’t even close to the one the Post Office or my servicer recognizes.

(This, of course, begs the question: If Fannie Mae didn’t own my loan, where had my servicer been sending my principal and interest payments to every month for the past seven years?)

I called and emailed Fannie Mae at least four times to get a response for this column but never got one. For its part, Freddie Mac says it can make a “post-funded data correction,” as it’s called, in six to eight days, at any time of the month, provided the servicer has the proper documentation.

As Ruffner notes, a simple problem like this costs real money. I’d been trying to refi through HARP ever since it was first introduced in 2009. So I’ve been paying about twice the market rate for my loan over the past four years, which I assume cost me in the tens of thousands of dollars in extra interest.

Anastos brought up another point, which should make Fannie and Freddie and their lender partners stand up and take notice.

“A dishonest person could have tried to make a case that they shouldn’t have to repay the mortgage,” he said. Indeed, many borrowers faced with foreclosure tried that tactic, and some were successful.

I’m too honest a person to have attempted that. But I was sure angry enough to think about it.

Isn’t it reassuring to know that the same government that can’t fix a simple thing like your address now wants to fix your health insurance?

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