Friday, August 14, 2009


First of all, we got ourselves into a bad position through spending beyond our means. That's the root of the problem I'll describe here, and I admit it. In the last two years, I have managed to chip off $4000 from a huge debt through some better financial management, but it's not making a large enough dent. So we decided to try to refinance our home.

Our intent in getting a refinance was not for getting some extra money for making home improvements. If only! As it is now, our house is not luxurious; it is functional and mostly comfortable, which is fine although some things could certainly stand to be updated. But our reason for refinancing is to get some extra money for paying off our credit debts.

Bank of America offered us a great-sounding deal back in January. It would allow us to pay off our credit debt, for which I have been paying out about $1400 a month, and only increase our mortgage payment by $400, putting about $1000 extra dollars in our pockets each month. It would also allow us to finish our house payments in 15 years instead of 17 years. We have plans of building up more emergency money in savings, of which we have very little. We also plan to help our kids with some of their college costs.

Even getting the process started was not easy. When I tried to get things going in December, there were problems. First, my late father and I have the same name. When he passed away, one of his gasoline cards didn't get paid off and it ended up on my credit reports. It took me about a month to get that problem fixed with Experian, TransUnion and whatever the third major credit report outfit is (I have forgotten the name). But by early February with due diligence (LOTS of e-mails and phone calls) I got the problem fixed. It was at that point when we were actually able to get the official refinance process going.

When you apply for a refinance, the bank will ask you for things such as proof of home insurance, a couple months worth of pay stubs and bank statements, and a current appraisal of your home's value. Once the bank gets these documents, they are good for three months. If the bank takes longer than three months to get your refinance done, they will ask you to resubmit these things.

We started out with an estimate on our home's value of $170,000 and based our projections on that, with a view toward getting about $35,000 in extra dollars with the new mortgage. That amount would cover our credit debts and give us some extra bucks for things like replacing some bad plumbing in one of our bathrooms. Four months into the refinance process, B of A finally hooked up with a local appraisal, which in my estimate lowballed us. Granted, our house is old, but the appraisal came in at $22,000 lower than we expected... cutting into the amount of extra money available in a very big way.

Now, six months after officially starting the refinance process, we are getting closer to having something to sign, but we still aren't there. They advertised the process as taking 90 days, and we're now on Day 180!

For final approval, once everything is in place the application is sent to an underwriter for approval. This should only have to happen once, but we are on the second time with the underwriter now. A few weeks ago we were told I had no FICA score on my credit report; how that is possible I have no idea. All the credit information problems were cleared up six months ago, or so I thought. Apparently they were able to work that out, but now it is back with the underwriter again because we have a small line of credit with B of A and the underwriter has to change things on the documents so that the line of credit is not listed first but rather second in priority on our list of accounts, or some such thing.

For a few months now I have been wondering if Bank of America is jerking us around. It's like Mrs. Snave and I have learned to expect snags and delays, and it is making us wonder what curveball B of A is going to throw us next. Our experience with them has not really been all that great.

I know a lot of other Americans are trying to refinance their homes. I do not know how many are, or to what degree they are finding success. If the banks are getting deluged with applications, I can see how it might take a little longer than the 90 days they say it should normally take.

Is this like the American health insurance industry, in which there is a virtual sub-industry based around denying people coverage? I like to believe not, and I certainly hope not. I know they are having to be careful they don't take on any more bad risks than they already have, but I had been given the impression that banks were being told they needed to make it easier for people to get loans and do refinances, and this has been anything but easy.

It is possible we might get about $16,000 in the refinance, if it actually happens. With a generous offer of some other money from a family member to help us out a little, we might be able to get the credit cards zeroed by Christmas. They are already in our safe deposit box, and have been there for some time now. With the better spending habits we have cultivated and some subsequent minor lifestyle changes, we should be fine financially... when (or maybe if) B of A comes through with some papers for us to sign. If they don't? Well, we will be deep in debt for years and it's our own damned fault.

Our lessons, learned the hard way:
1. Watch your credit debt, and don't let it get to be more than you can pay off in any given month.
2. Check your credit scores from time to time and make sure they are good, that they do not contain erroneous information.
3. If you try for a refinance on your home, second mortgage, etc. don't expect the process to be easy because it won't be. Did we choose the wrong lender for our refinance? Possibly. But maybe they are all like this...

Do any of you have stories similar to this?


Blogger T. Paine said...

Snave, I could have written that posting myself. I am currently going through the exact same thing with US Bank and have had nearly identical issues with them. To borrow from President Clinton, "I feel your pain!" :)

3:56 PM  
Blogger J. Marquis said...

Your story is really amazing. I think they're just a really badly run organization..I can't see any benefit they would derive from jerking you around for months and then ultimately not loaning the money.

6:07 PM  
Blogger Beekeepers Apprentice said...

Snave, I feel for you and the Mrs., I really, really do. I've been in real estate for 16 years, with 5 of that in commercial real estate banking, but I remember well the heady days of closing residential loans - purchases and refi's. Here's the deal: Banks are NOT lending. They are supposed to be making it easier for risky loans to refinance into more reasonable and thereby safer rates, but ONLY if they are in the HAMP program, and even they are not really living up to the Fed's expectations in any meaningful way. So, yes, your problem is indeed endemic in the system right now - banks don't want to lend on real estate, period.
I hope they didn't make you get another appraisal, because those suckers cost $350 a pop and up.
That said, the drop in your home value could well be reality. What you want to do is see if your locality's treasurer's office has a website that lists the detailed, and public, transfer information along with the tax assessments. That is rare, but some localities do have them. That way, you can go online and see what the house 3 doors down sold for 3 months ago, etc. The other way is to keep track of what homes, if any, are for sale in your immediate area and write down the addresses. Then call your local real estate tax assessors office and see what the house sold for. This is public record in most jurisdictions, I believe. This is an easy way to see what the "comps", or comparable properties, are selling for, therefore affecting your home value.
If you think that the appraiser really did lowball you, you could shell out for your own appraiser, but BofA doesn't have to accept it, and that will depend on the relationship you have with your loan officer. The appraiser that BofA used is considered a servicer for the bank - meaning, they hired him, and even though you end up paying for it at closing, he works for them.
Otherwise, if they keep yanking you around, look around for a local, community bank, or a credit union, for much better service. BofA is too big to be of use for anything beyond simple checking accounts - the service will suck because you're talking to people who are worked to death, far away, and underpaid with all the layoffs and cuts that BofA had to make (they recently closed a bunch of branches, I've heard). My best suggestion to you is to cut them loose if they take another 90 days. The excuse of no FICA score was utter bullshit - trust me, if you've got credit cards/home loans/etc out there in your name, you've got a credit score. My next suggestion, so that you don't ever end up in this predicament again, is to go to a mostly/only cash basis. Meaning, if you can't afford to pay it off within 30 days, don't buy it - wait. Start that emergency savings account - that will do wonders for you mentally and emotionally. It is utterly exhausting to be burdened with debt, and the worries of "What happens if the car breaks down, how are we going to pay for that?". I've been there, it's definitely a soul-sucking experience. I subscribe to an email newsletter that is kind of hokey, but has some really useful information often:

Here's hoping that you find your way through this - and here's to hoping that your experience with BofA was the worst of it, and that it gets a little easier from here on out :)

6:33 PM  
Blogger Snave said...

Thanks for the comments, and for the encouragement!

Beekeeper's Apprentice, I will check out that website. We have been doing a much better job the last two years with spending and budgeting, but as I said we aren't making a nearly large-enough dent in the credit card debt. Now that we will apparently get all but a few thousand of it paid off very soon, and the rest of it paid off by Christmas or so, we will need to step it up another notch to continue our habituation of good spending behaviors!

Since I posted this, we got a call back from someone in upper management after we got a bit nasty on the phone with some lower-echelon people earlier today. This higher-up checked things out for us, but then told us there was MORE INFORMATION THEY NEEDED!! They needed our W-2 forms for 2008, she said. So I dug those out and dashed down to a copy store before it closed to fax those items. (Surely they could have asked us for that stuff a few months ago, eh? I couldn't believe it...)

The higher-up called about ten minutes later to confirm they had received the fax, so at least I got a fleeting impression they are trying to work with us.

To his credit, the guy who has been managing our account has called me back a couple of times on weekends when it has been past dinnertime where he is (Connecticut). But he hasn't been able to get much done though, so we have had to call and get a bit ornery the last few days.

Now that they have all our information (or at least they say they have it all...) the higher-up we talked with this afternoon said things should be in order for us to sign by Tuesday or Wednesday. I will only believe that when I see it, because I have been conditioned through this process to NOT take them at their word.

If they do come through with the money for us, it will be worth it for a mortgage at 4.375% interest and for that extra money in our account each month.

7:01 PM  
Blogger Tom Harper said...

It's too bad that "Watch Your Back!" is the most important motto now, when you're doing anything with a bank or mortgage company.

When we first bought a house in 1994, things weren't as sleazy. An unscrupulous realtor or lender probably could have taken us for a ride if they wanted to. We were careful and all that, poring over jillions of pages of legalese written in a .01 font. But everyone we dealt with was honest and clearly walked us through all the landmines.

As we've all found out lately, it's only too easy to trick people when they're undergoing a huge transaction like this. It's as easy as tricking a blind person into crossing the street when a car is coming. "OK, the coast is clear. Step on into the crosswalk."

10:57 AM  
Blogger Beekeepers Apprentice said...

Tom's right, it was a lot cleaner business in the early - mid-90's. The S&L debacle was still fresh in the banking and real estate world's minds. It was around 2000 when it all started to become this giant shell game. Big surprise, Bush was in office.

Snave, I'm glad if I was of any help at all - I hate to see people suffer, and am happy to impart whatever inside knowledge I have of the system to those on the outside. I really hope that BofA gets their shit straight for you :) It all makes one understand why people go postal.

11:12 AM  
Blogger S.W. Anderson said...

Snave, getting and keeping credit cards paid off is one of the best things a person can do. Good for you.

I don't have a big story to tell, in large part because my missus could probably teach Tim Geitner a thing or two about money management. She has a talent for it I don't and a lot of self-discipline to go with it.

I did run across a pretty good story on MSN a few days ago, "10 companies Americans love to hate." It's based on customer surveys. Bank of America is No. 9 on the countdown.

My wife and I have had pretty good dealings with BofA, but we're aware not everyone can make that claim.

4:37 PM  
Blogger Demeur said...

I would check out a credit union. You should have one through the school district. If not most have open enrollment and better rates on loans and credit cards.
I refinanced my place about 10 years ago and paid it off in 7. Two years ago I took out a credit line which took two weeks and a drive by appraisal. What a difference a few years makes.

8:21 PM  
Blogger Mercurie said...

I'm just glad my home was paid for long ago! I really do feel sorry for you and Mrs. Snave.

3:19 PM  
Blogger Snave said...

The word today is that they have "escalated" our account, meaning they are expediting things a bit. Apparently it all got approved today, so now it's just a matter of how soon they can get the papers faxed to our local bank for us to sign. I will call them again tomorrow to see what's happening.

10:13 PM  
Blogger Snave said...

Today's word is that we sign closing papers on Friday August 28. I will believe it when I see it, but at least we have a date set.

7:44 PM  
Blogger Beekeepers Apprentice said...

I'll be checking back in with you Friday evening. Are things still moving along?

6:08 PM  
Blogger Beekeepers Apprentice said...

Snave, did they ever get you closed?

2:38 PM  
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