Shop around if refinance stalled

Question: My sister-in-law is trying to refinance her home. She has roughly $250,000 equity in a $550,000 home.

She applied back in early August and now we are almost in November. Her lender tells her everything is set to go but then keeps stalling asking for more verification info.

We are dumbfounded as to why this is happening. Credit history and income requirements are no obstacle. Her lender is not responding to her daily phone messages. To whom should we call or write to light a fire ending this nightmare refinance?

S.R., Everett

Answer: I’m sorry to hear that your sister-in-law is having so much trouble refinancing her home.

If her income and credit are good, as you indicated in your letter, it should take no longer than 30 days from start to finish to do the job. However, sometimes people think their credit is better than it really is, so unless you have seen her credit report you may not know for sure that her “credit history is not an obstacle.”

But let’s assume that you are correct and that your sister-in-law’s income and credit are both fine, what could be causing this unjustifiable delay?

As a longtime mortgage company owner myself, I know some of the things that may be going on behind the scenes. Here are some possibilities:

One possible explanation is that some loan officers and the mortgage companies that they work for are simply incompetent, unethical or both. I hate to say that, but it’s true.

Thousands of people jumped into the mortgage business during the big refinancing boom a couple of years ago and many of them received little or no proper training. Fortunately, a lot of those incompetent people have been forced out of the mortgage business during the current credit crunch, but some still remain.

So your sister-in-law may be working with somebody who simply doesn’t really know how to properly process her loan.

Another possible explanation is that the mortgage company may have promised to deliver an interest rate that is no longer available, and so they are stalling and hoping that rates drop.

Rather than actually locking in your interest rate with the loan, some mortgage companies float the market and hope to get a lower interest rate (and make a bigger profit) by the time they close the loan and actually have to provide the funds.

Sometimes the mortgage market goes up and the mortgage company either has to eat the loss or make up excuses not to fund the loan. I hope that the latter is not the case with your sister-in-law’s loan.

Yet another possible explanation is that the lender’s underwriting guidelines may have changed.

Ever since the subprime mortgage market for borrowers with poor credit collapsed earlier this year, lenders have been tightening the loan qualifying standards for many loan programs — even those for borrowers with good credit. So it’s possible that the lender is now requiring additional documentation in order to approve the loan program that your sister-in-law applied for, even though that documentation may not have been required when she originally applied for the loan back in August.

Since this is a refinance and not a purchase loan, your sister-in-law does not have a closing deadline, so the best solution is to have her contact a couple of other banks and mortgage companies. She may be able to get a better interest rate than what she is supposedly getting from the lender with whom she is working.

Mail questions to Steve Tytler, The Herald, P.O. Box, Everett, WA 98206 or e-mail him at economy@heraldnet.com.

Talk to us

More in Herald Business Journal

Logo for news use featuring Snohomish County, Washington. 220118
Business Briefs: State minimum wage rises in January

Also, Boeing workers’ donations support local nonprofits and fundraiser for businesses impacted by Bolt Creek wildfire.

Jollee Nichols, right, and daughter Ruby, 2, work on an art project together at the Imagine Children’s Museum on Wednesday, Oct. 26, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
With new addition, Imagine Children’s Museum doubles in size

More than just space, the Everett museum’s new $25 million wing is an investment in mental health.

Artistic rendering of 526 Speedway exterior. (Mosaic Avenue Realty Ltd.)
Mosaic Homes looks to add industrial condo space in Mukilteo

Mosaic Homes steps into commercial real estate development with 526 Speedway, an industrial condo project.

Andy Illyn with a selection of his greeting cards, Cardstalked, that are sold at What’s Bloomin’ Floral on Friday, Oct. 28, 2022 in Arlington, Washington. (Olivia Vanni / The Herald)
Adventure-seeking cop finds new thrill in greeting cards

Mukilteo assistant police chief Andy Illyn unwinds by turning puns and dad jokes into greeting cards.

Dan Murphy, left, Mary Fosse and Rex Habner. (BadgleyPhotography.com / Snohomish & Island County Labor Council)
Everett City Council member honored by local labor council

Mary Fosse, candidate for District 38, receives the first annual Mike Sells Labor Champion award.

Erika Heer is an EVP, Chief Human Resources Officer at Coastal Community Bank.
Tips for Businesses to Prepare for the Pay Transparency Law, Effective Jan. 1

A recent amendment to Washington law will soon require employers to disclose… Continue reading

Lisa Lefeber, CEO of the Port of Everett, speaks to a crowd while in front of a sign celebrating the opening of the new Norton Terminal on Thursday, Dec. 1, 2022, at the Port of Everett in Everett, Washington. (Ryan Berry / The Herald)
Port of Everett christens new Norton cargo terminal

The $40 million terminal took two years to complete and doubles the port’s storage capacity.

Screen printed dish towels available at Madrona Supply Company on Saturday, Oct. 22, 2022 in Clinton, Washington. (Olivia Vanni / The Herald)
Do some good along with your Christmas shopping

Head across the Sound to Whidbey Island for gift-buying with a do-gooder spirit

Shoppers walk in and out of Macy’s at Alderwood Mall were Black Friday deals are being advertised on Thursday, Nov. 17, 2022 in Lynnwood, Washington. (Olivia Vanni / The Herald)
Go ahead, hit snooze: Most Black Friday deals are online

Braving the stores on Black Friday is still a thing, but more retailers are closed on Thanksgiving.

FILE - In this photo provided by the Washington State Department of Natural Resources, a crane and boats are anchored next to a collapsed "net pen" used by Cooke Aquaculture Pacific to farm Atlantic Salmon near Cypress Island in Washington state on Aug. 28, 2017, after a failure of the nets allowed tens of thousands of the nonnative fish to escape. A Washington state jury on Wednesday, June 22, 2022, awarded the Lummi Indian tribe $595,000 over the 2017 collapse of the net pen where Atlantic salmon were being raised, an event that elicited fears of damage to wild salmon runs and prompted the Legislature to ban the farming of the nonnative fish. (David Bergvall/Washington State Department of Natural Resources via AP, File)
State won’t renew leases for Puget Sound fish farms

Cooke Aquaculture has until Dec. 14 to wrap up steelhead farming and begin deconstructing their equipment.

Kevin Flynn, right, a meat-cutter with the Marysville Albertsons, hands a leaflet to a shopper during an informational campaign on Wednesday, Nov. 9, 2022. Flynn was one of about a dozen grocery store workers handing out leaflets to shoppers about the proposed merger between Albertsons and Kroger. (Mike Henneke / The Herald)
Proposed merger of Albertsons and Kroger worries employees

Workers at an Albertsons in Marysville urge shoppers to sign a petition blocking the $25 billion deal.

Kim Taylor, left, and Jeff Stoner co-own Greenbank Cidery, a newly opened taproom on Whidbey Island with eight varieties of cider on tap. (Rachel Rosen / Whidbey News-Times)
Cider tasting room opens on Whidbey Island

The owners of Greenbank Cidery have opened a tasting room in Coupeville. Eight varieties of cider are on tap.