Low Mortgage Rates a Mirage as Fees Climb, Eligibility Tightens

[Purveyor]

By James Sterngold

Feb. 27 (Bloomberg) -- Brian Wickert, a mortgage banker in Butler, Wisconsin, prides himself on screening applicants carefully. That’s why he was stunned when a customer who sailed through four home loans tried to do a refinancing in January, only to be rejected by three national lenders.

The borrower’s credit standing and income were solid, said Wickert, 47, president of Accunet Mortgage. The problem was that, with home sales plummeting along with prices, the appraiser couldn’t find the required three comparable sales in six months within a one-mile radius.

“The business has gotten tougher than I’ve seen it,” Wickert said. “The person who has decided he wants to give himself his own personal economic stimulus package by refinancing at low rates is being stymied by the rules and the fees. Too many people are being excluded.”

Bankers around the country say one reason the housing market hasn’t stabilized is that while mortgage rates have come down, hurdles have gone up. Rising default rates and bank losses have made lenders more risk-averse, leading to higher fees, increased insurance rates and difficulties refinancing loans.

The average rate on a 30-year fixed mortgage dropped to 5.07 percent for the week ending Feb. 26 from 6.63 percent for the one ending July 24, according to data compiled by McLean, Virginia-based Freddie Mac. Meanwhile, the percent of mortgage applications that led to closings fell nationwide to 59 percent in the first half of 2008 from 66.3 percent in 2006, the most recent period for which data is available, the Mortgage Bankers Association reported.

‘Too Tight’

“Underwriting standards have changed from lax to too tight,” said Lawrence Yun, chief economist at the Chicago-based National Association of Realtors. “The pendulum is swinging too far the other way. We can’t stabilize the housing market if buyers can’t get reasonable mortgages.”

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BLOOMBERG: http://www.bloomberg.com/apps/news?pid=20601213&refer=home&sid=a8ta_MEhUZ9E

[luvspeas]

1. My bank is run by 19 year old frat boys

I was at one of the 6 Chase branch banks within 3 miles of my house trying to get them to once again straighten out the mess the bank caused me by taking money out of my account for some mystery fee that equaled the balances in both my checking and savings accounts and made me overdraw. Once when my fratboy left the room to ask the manager another fratboy who I knew I would meet soon when I demand to speak to him as usual, I started snooping on his desk a bit. There was this interesting document about "how to explain the service fees for mortgage refinancing. There were things like, "How to explain the $750 re-servicing fee", and "the $450 financial assessment fee". It went on like that for an entire page. I swear these banks deserve to fail and we should not be proppiing them up any more so these kids can bag groceries where they belong.