Posted by Jodith/WA on 12/1/10 12:10pm
Msg #363390

Interesting signting and a theory

I had a refi signing the other day and was surprised to find out that not only was it initiated by the existing lender, but that the lender was also paying all of the fees.

My husband had an interesting theory. With all the uproar over proper filing and murky document trails on so many foreclosures, he wonders if maybe some lenders are taking steps to get clear paperwork on existing loans where the document trail is less than pristine.

If that is true, it could mean another surge in refi work for us.

Reply by Jodith Allen on 12/1/10 12:11pm
Msg #363391

Pffft...that should say Intersting Signing....I can't type today.

Reply by BrendaTx on 12/1/10 12:40pm
Msg #363405

*I had a refi signing the other day and was surprised to find out that not only was it initiated by the existing lender, but that the lender was also paying all of the fees.*

And, it's better to keep a good client paying YOU by initiating the loan and waiving the fees.

Business retention.

Reply by Dennis_IN on 12/1/10 12:43pm
Msg #363406

Take a look at the $$$ to pay off existing loan. Then look at the new loan amount, it is usually larger. If the Lender is really paying ALL the costs then you may be right, but my experience is that they are giving the BO a lower rate but on a higher loan amount.

Reply by Donna McDaniel on 12/1/10 1:25pm
Msg #363437

I believe the loan amount is larger because most borrowers don't want to pay out monies at closing so the interest, escrow deposits, and sometimes current taxes due are not considered 'fees' and are rolled back into the loan. The rest are lender paid.

Reply by Jodith Allen on 12/1/10 2:03pm
Msg #363451

Nope, it was the payoff amount on the loan plus a month of interest between last payment and closing. Nothing else. There were $870 of fees and the lender paid those.

It struck me because the borrower kept going on about why the lender would be doing that. My first thought was retention. Better to make less on the loan than have it go elsewhere, but it's the first one I've seen doing that. My husband came up with the alternate theory after reading an article about 2nd foreclosures. Banks giving a house back after foreclosure because clear title couldn't be gotten, and then foreclosing a 2nd time after the paperwork was cleared.

Reply by ReneeK_MI on 12/1/10 12:59pm
Msg #363416

That's called a "streamline"

Refi by same lender is called a "streamline", and often there are fewer costs to begin with. Depending on several factors, they'll usually fore-go an appraisal and other fully-documented things. Lenders and brokers both regularly track their 'holdings' & watch for time-lapse and rate changes, it's their first line of easy business. Most states (all?) have regulations about how long a period of time has to lapse before they can solicit the same clients, and define what is/isn't considered predatory.

Short answer - nothing new, nothing likely to affect refi work any differently than it always has.

Reply by Stamper_WI on 12/1/10 1:52pm
Msg #363444

Re: That's called a "streamline"

And they are aware of other lenders solisiting their borrowers as well as the borrowers looking for a better rate. Many tell me they were approached by their current lender.

Reply by Philip Johnson on 12/1/10 5:12pm
Msg #363493

The TIL will tell the tale.

Say that 3 times fast. Beyond that if you look at the APR on these loans you'll notice that the rate is .001 to .010 lower then the note rate. These are truly no cost loans to the borrower.

Reply by bob/IA on 12/1/10 6:45pm
Msg #363523

Re: The TIL will tell the tale.

I have done bunches of these no cost refis, all for the same lender. My theory is that they do not want to lose a good customer to someone else. All borrowers had an excellent credit rating.

Reply by SheilaSJCA on 12/2/10 2:39am
Msg #363566

Ditto what Bob/IA said n/m