Wish I knew now what I didn't know then...
We went for a refi in late March this year to get out of an ARM that was inflating out of control monthly. I spoke with a loan officer in the Pleasanton branch and explained our situation. The biggest concern for him was that we had only had the ARM loan for 4 months. After a check of my husbands FICO and receipt of our loan package (all by fax), was told a day later that they would be able to do something for us. He said our home would have to appraise for $650k (which it did, on the button).
A day or so later, this loan officer is transferred to and made manager of the Ameriquest Concord branch.
We were told that my husbands FICO was pretty low, so our rate wouldn't be that great. However, the final loan amount was almost $16,000 more than the Good Faith Estimate, and $60,000 more than our original loan balance with the prior lender. They charged us 3.195% points and a 3-year prepay. Our rate was still high, interest only and fixed for only 2 years. I asked why and was told that a FICO of 644 was really too low to qualify for a better rate. But once his cards were paid off through escrow, his score would start to climb, and after 12 months we call him up for a refi with a much better rate, and he could waive the prepay penalty.
We were rushed through closing three days later, with a notary ($300!) who couldn't answer any questions and basically flipped page after page for my husband to sign.
That evening I reviewed the note, rider and disclosure statements that my husband had signed, and saw the servicing disclosure which stated 76-100% of all their loans are sold, assigned or transferred. Whoa! If the loan is sold, Ameriquest couldn't exactly waive a prepay in 12 months. So I called our loan officer/manager and asked him about it. I was told that it really didn't happen that often and it's just one of those disclosures they're required to make, and he reassured me that we could call him for a refi in a year when my husbands score was higher.
We went ahead with the closing. Got our checks for the credit cards, paid them off. Received a little cash back that was titled "padding" for paying off the previous lender on the escrow statement. Woo hoo!
We make our first two payments, and two weeks before the third is due, we receive a letter from Ameriquest informing us that the loan has been assigned to another lender for servicing.
Two weeks after that, we get our letter from the other lender. We're not happy. We call the other lender to see that now, because my husbands FICO has jumped to 721, we could refi with the new lender and have the prepay waived. It turns out they are just servicing our loan, because the note was sold to an investment company. So, they can't waive the prepay, because only the investor can do that. We are assured that they won't.
The loan officer looks up our loan terms, and tells us she's very sorry, but we got taken. "You should have walked away from that loan", she says."644 is low, but not sub-prime. You should have gotten a better rate." There is nothing she can do in terms of refinance.
I call a mortgage broker to see if there's anything we can do to refi and suck up the prepay penalty into a new loan. He does a quick review, and says that our debt to income is over the 45% most lenders require.
On the application typed up I'm assuming by a processor, but with information supplied by the new Manager, my husbands monthly income was inflated by $475.
I check a little further. On this same application, our second, free and clear home is left off the assets breakdown. He was faxed a copy of the deed with our loan package.
Also left off of the assets was a pension worth over $150,000, a statement for which was also faxed. Apparently, we also don't own any automobiles, but what we DO have is $25,000 in stocks and bonds... NOT.in short, he appears to have downplayed our financial situation. To stick us with a higher rate?
It is also stated that we owned our home for two years, when we just purchased it 5 months prior. And the appraisal? We received a copy of it after closing. The crafty appraiser supplied a picture of somebody elses (much nicer looking) backyard. We have been told that even though home prices here have risen about 15% this summer alone, our home would probably not appraise for much more than it did in March, so the loan to value just isn't there to support a refi.
So here we are, fixed for two years (at a HIGH interest rate), with the third year going ARM... No chance of waiving prepay for better rate and term. No other lender apparently willing to touch it, for many reasons.
Kimberly
Pleasant Hill, California
U.S.A.
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