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Thursday, July 1, 2010

A tale of two refinancings

Earlier this year, we got a come-on in the mail from CitiMortgage, which held the mortgage on our home. We didn't deal with them originally -- we had taken the loan out from a Dutch outfit, ABN-AMRO -- but Citi wound up with our paper.

In the mail piece, Citi offered to waive $500 of fees if we would look at refinancing with them. We took the bait and called in, and were greeted by a nice, knowledgeable loan officer in St. Louis, who told us we could refinance at 4.375%, which was nearly a full percentage point below our existing interest rate. Our credit score was high, there was plenty of equity in the house, and so things looked good for approval. We chatted with the loan officer as he filled out application forms for us on January 11, and on January 27 and 28, we scanned and e-mailed quite a bit of supporting documentation -- within a day or two of being asked for it. It took hours, but if you want to save money, you have to work at it sometimes. We also forked over $545 cash for an appraisal, which the appraiser knocked out in a matter of days after a drive-by of our house.

Then the wait set in. No one at Citi touched our file for nearly two months. By the time a loan processor finally started working on the file, it was March 8. On the phone from her office in Roanoke, Texas, she didn't listen very well, and she kept coming back to us with more dribs and drabs of documents and information that she needed, including some stuff we had already gone over with, and sent in to, the loan officer guy. O.k., fine, we thought. These things take time, and mortgage lenders are more careful these days than they were a couple of years ago. We told ourselves to be patient.

By April 13, with no progress in sight, we started asking what the heck was going on. The loan officer tried to be helpful, but he wasn't getting anywhere in moving things along. Finally, on May 11 -- four months after we applied -- a new loan processor called us from Roanoke and informed us that all the documentation we sent in in January was now too stale and would all have to be updated. If we did that, she told us in a robotic tone of voice, maybe she could get underwriting approval and we could close by the end of the month. Maybe. If we were good.

It felt a lot like starting all over. We thought to ourselves, "If we're going to start all over, why would we do it with these people?"

We called the loan officer in St. Louis with a proposition: Can we get our $545 appraisal fee back and call the whole thing off? After checking with a supervisor, he agreed. And that was the end of that.

On May 28, we contacted Umpqua Bank, the Roseburg institution that's as close to a local bank as one can find these days. We had moved a few deposit accounts there in recent months, and we suspected that they'd be much more attentive to our deal. We were right. We filed our loan application on line that day, and paid $460 for another appraisal shortly thereafter. The appraiser was quick to contact us, was surprisingly thorough, and spent about an hour with us at the house. The loan officer, in Portland, was every bit as knowledgeable as the Citi guy in St. Louis, and she answered phone calls on her cell phone after business hours and on weekends to see the deal through. The loan processor, in Tigard, stayed focused on the file. It seemed as though the next thing we knew, the title company was calling with escrow information.

We signed the papers last Thursday, the deal closed on Tuesday, and the old loan was paid off yesterday. That's 33 days from start to finish. Our new interest rate is 4.25%, which by our calculations cuts four months off the end of the term of our loan. In our geezer way of looking at things, that's four fewer months of working for the man. (O.k., at least not for the banker man. At that point we may be paying Yale.) Our net out of pocket, with all the fees, was about three quarters of a month's mortgage payment. That's a darned good return on investment, if we keep the house and pay the loan off gradually, which Lord willing we hope to do.

Not to jinx it, but our whole Umpqua move has been pretty amazing. Chase and Citi are out of our lives, at least for now, and now we like the people at our bank. Their branches, which they call "stores," are goodwill-generating places, but more importantly, Umpqua's paying 2% interest on checking account balances at the moment. Dealing with a financial institution has not been this satisfying in a while. We're getting nothing for saying this, but even if you're not ordinarily into the "buy local" bit, that outfit is definitely worth a look.

Comments (20)

Curious: Why a bank rather than a credit union?

Credit unions have only just begun doing mortgages, but they do offer pretty good deals if you're a member. Either way, Umpqua/CUs keep the paper, so they'd be a lot easier to deal with.

I'd rather deal with a carefully-screened mortgage broker than an out-of-town bank.

You just need to be in the face of these people to make anything happen - phone calls don't do it.

Great timing. I called Wells Fargo this morning after visiting their website today. They claim they can Re-fi existing customers at a lower rate with no fees, appraisals, or closing costs (as long as you don't want any additional cash for other loans). The on-line form wouldn't process for me however so I called them. They said they would get back to me because there was a 15 minute wait to talk with a loan officer. It has been 2 hours. Still waiting to hear.

I don't know why more people don't use credit unions and community banks. Guess they don't have the marketing budgets of the huge commercial banks.

Not that CUs are perfect -- OnPoint (the old Portland Teachers) got in bed with the sleazy Countrywide for a short period a few years ago. But in the main they are much more customer-focused.

Can't say enough GREAT things about Albina Community Bank here in Portland. On MLK near where Grand splits off, NE Sandy near 60th and in the Pearl. Had a medical emergency and they understood and helped like family! Honestly, the best bank I've ever used.

The really surprising point here is that they refunded your first appraisal. That is amazing because the appraisal had already been completed and paid for.

I don't recall, in 24 years in the real estate business, of ever hearing that happen. Good for you!

Oh, and in those years I have cultivated three great loan officers and 2000 bad ones.

Umpqua also has a small business credit of $20 for kids to start a lemonaide stand complete with a neat little kit. That was one of the more fun and original business promotions we have participated in.

Update - WF called me back and I locked in over the phone. No fees, appraisals, closing costs, or any additional monies from me at all (they said). All this as an existing mortgage customer.

I only had two choices with their no cost program. 5.3 for 30 years or 4.75 for 20 years (or I could pay the the fees and costs and get a better rate). Seems like a no-brainer because both no cost loan options were less than I am paying now. The Loan officer said it would take 30 days to close so we'll see.

Did you have to threaten legal action to get your original $545 back?

I bought the house I'd been renting last summer in Mult. VIllage. Asked around about loan officers, got a recommendation for Umpqua and decided to pay a bit more in interest to go with a local company. When we finally got the papers all signed (process took about six weeks)I asked about mortgage payment coupons. They told me, "Oh, you'll be getting those from Bank of America. We're selling your loan to them right away." That's the bidness these days. I found Umpqua's service for personal banking lacking.

Why a bank rather than a credit union?

We're members at OnPoint, but these days they behave a lot like a bank, only less convenient.

No fees, appraisals, closing costs, or any additional monies from me at all (they said). All this as an existing mortgage customer.

Since Citi was already stuck with us as a customer, I couldn't believe there would be any rigamarole. Instead, there was more red tape than I had ever encountered, and a complete lack of diligence on their part.

5.3 for 30 years or 4.75 for 20 years (or I could pay the the fees and costs and get a better rate).

They get you one way or the other. But no cash out of pocket is nice. We came close to that, since we got to skip a month's mortgage payment. But we still wound up with an extra outlay this month.

Did you have to threaten legal action to get your original $545 back?

No. I think they were genuinely embarrassed. They never told me what was going on.

I found Umpqua's service for personal banking lacking.

Guess you had the opposite experience from mine.

Hmm. Wells Fargo offered us a refi, so I checked around and found a broker who was able to secure a much lower rate from them.

We got 4.6% back in December; down significantly from the 6.9% we had.

The original WF offer, btw, was 5.9%.

Roanoke is northwest of Dallas, just outside of the festering anal cyst that is Lewisville. It's most of note for being the stomping grounds of Scott Armey, the son of former US Representative Dick Armey. This actually is important, because it gives an idea of what Roanoke is like. Specifically, that Citi call center apparently took a lot of former employees from the famous subprime mortgage company Countrywide, headquartered in Richardson. This also is important. In other words, you dodged a bullet.

We also refinanced last year with Umpqua last year. From application to closing it took 20 days. I love getting an old fashioned mortgage bill every month.

Jack - interested to know the difference between your appraisal amount and the market value on your 2009 property tax bill. If that's info you don't mind sharing.

The two appraisals we got were about 7.4% apart. The real market value of the house as determined by the county was in between the two appraisals' conclusions -- a little closer to the lower one.

The assessed value, of course, is a mere 41.4% of the real market value.

Just went back and looked at our mortgage history on this house. 7% in 1998; 5.75% in late 2002; 5.25% in summer 2003; 4.25% now. And barring a really swift and radical additional fall in interest rates, that's that.

When people re-finance, they need to consider the length of the loan. Nobody has mentioned that so far. People are too obsessed with interest rate.

Having worked in the industry for six years it's not surprising to me the larger banks like WF, Citi, Chase, etc treat people like garbage.

Until enough people actually leave them, the same practices will occur.

Congrats on the new loan, sounds like things worked out for the best!

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