Refinancing isn't so simpleQ: I purchased my house in 1989...


December 27, 1992

Refinancing isn't so simple

Q: I purchased my house in 1989 and got a 10.5 percent interest rate on the loan. I would like to refinance it simply to get a lower interest rate. Is there some way for me to do this without going through the paper chase?

My financial position, job and credit rating are unchanged from the time I got the original loan. My house has gone up in value, and most importantly, I do not want to increase the loan balance. In fact, I am willing to pay all the costs of the new loan in cash.

Why can't my original lender just give me a new loan without the hassle of a costly reappraisal, credit report, title insurance and all the other nonsense?

A: Lenders view refinancings as entirely new loan transactions and subject them to the same degree of scrutiny as they would an original mortgage agreement. This is true whether you are an existing customer of the lender or a potentially new borrower.

PTC Why should lenders treat someone they've known for years as though they just walked in off the street? There are two reasons, lenders say.

The first is that most lenders do not hold on to the mortgage loans they make. Instead, they sell them into the secondary market to investors, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corp. (Freddie Mac). Once a loan is sold, the lender is powerless to change its terms.

So, if you want to change your loan terms, you have to get an entirely new loan.

This sets up the second reason for lenders' imposing their strict scrutiny on refinanced loans. In order to sell their loans on the secondary market, lenders have to offer their best assurances that the loans will be repaid. Lenders say they can't simply accept your word that your credit is unblemished and your job is secure.

"Refinancings are not as simple as borrowers would think," says Tom Terneus, senior vice president for Home Savings of America, one of the nation's largest mortgage lenders. "Just because a person says his situation hasn't changed doesn't mean that we shouldn't verify that."

That said, Mr. Terneus admits that many lenders are willing, if asked, to make minor revisions in the terms of certain types of loans -- changes that stop far short of a full refinancing.

For example, a lender might be willing to adjust the maximum rate of an adjustable-rate mortgage or its annual adjustment amount without subjecting the loan to a refinancing. However, he acknowledged that most lenders do not advertise this and will only provide the service if asked by the customer.

Some lost bonds can be replaced

Q: I lost some U.S. Savings Bond certificates that I had purchased. Is there anything I can do, or is my money lost forever?

A: Your bonds can be replaced if you have enough information about the lost certificates to convince the U.S. Treasury that you are the rightful owner of the misplaced or ruined documents.

If the bonds were in your possession when they were lost, you must file a PDF-1048, a "Lost Bond Claim" with the U.S. Treasury. If the bonds were purchased and lost in the mail before you received them, you must file a PDF-3062, or "Claim for Relief on Account of Loss, Theft or Destruction of U.S. Savings Bonds After Valid Issue but Prior to Receipt by Owner."

Bondholders filing a PDF-1048 will be asked to supply the following: the bond's issue date, serial number and denomination as well as the name and Social Security number of the bondholder. The amount of information you supply will determine how easy it will be to get the bond reissued.

Both forms are available at banks. Taxpayers in the Central and Western United States can also get them by calling the Federal Reserve Bank of Kansas City at (800) 333-2919, Monday through Friday, 9 a.m. to 6 p.m. EST.

There is a larger lesson here that could make a wonderful easy New Year's resolution for all bondholders: keep a detailed list of your bond holdings to ensure quick replacement in the event of loss.

Consumer confidence boosting home sales

Q. What's causing the boost in home sales in most regions of the country?

A. A surge in consumer confidence is likely behind the 12.3 percent increase in sales of existing single-family homes from October 1991 to October 1992, according to a report from the National Association of Realtors.

"We're seeing more people entering the market at a time of year when sales generally start to dwindle," said NAR President William Chee. "Very likely there is some pent-up demand that built up while buyers stayed on the sidelines due to uncertainty about the economy."

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