Mortgage Issues: When You Are Unable to Refinance Your Home

A week does not go by when I talk with a client or prospective client about issues with their mortgage or their need to utilize the equity in their home and cannot.  News articles report the housing market continues to improve.  The Federal Reserve recently published an article entitled Residential Mortgage Lending from 2004 to 2015:  Evidence from the Home Mortgage Disclosure Act Data with interesting data on the mortgages.

Evidence from Home Mortgage Disclosure Act

The article highlights several aspects of mortgage but I’ll focus on three of them.  The first being that interest rates still remain low and mortgage credit conditions ease allowing for more people to obtain mortgages.  Overall, the denial rates on application for home purchase loans and refinance loans declined from 2014 rates.  The biggest reason cited for denial of a home purchase mortgage or refinance was due to credit history.  Secondly, 2015 saw an increase in non-conventional mortgages which are those with mortgage insurance from the Federal Housing Administration (FHA) or guarantees from the Department of Veterans Affairs (VA), the Farm Service Agency (FSA), or the Rural Housing Service (RHS).  Third, the data reflects that non-depository lenders sold nearly all of their loans within the calendar year.  Credit Unions sold less than one-half of the home purchase loans they originated and just over one-third of the refinance loans they originated.

Refinancing Your Home

Although the article contains much more information, I point out these three areas, because I frequently see issues within them in my day to day practice.  Recently, I have had several clients with equity in their homes they want to pull out to pay creditors but are unable to refinance. They are unable to refinance because their credit score is too low or their debt-to-income ratio is too high.  As opposed to refinancing, a chapter 13 bankruptcy debt consolidation is a good tool to protect the equity in a home and deal with creditors.  More frequently now than in the past, debtors have non-conventional mortgages and need to know the consequences of surrendering their home and owing money to the federal government.  Also, it is helpful to know the rules about obtaining a mortgage after a bankruptcy discharge.   Finally, debtors have enormous amounts of trouble with mortgages when they sell from one to another.  Payments disappear or are applied incorrectly, fees are added, etc.  If you have had trouble after your mortgage was sold or with any financial problems, come talk to one of our attorneys.  We offer a free consultation.