Why Chase Turned Me Down

It's understandable why a bank might not want to to refinance a home that is underwater, or where the owner can't show enough income to justify the rate. But what about a perfectly normal mortgage?

The New York Times had a recent piece about otherwise qualified homeowners who try to refinance their mortgages at today's ultra-low rates, but are turned away. The issue may be among the topics that President Obama will address with the so-called "fat cat" bankers in the coming weeks.

In the meantime, it happened to yours truly as recently as last week on my condo in suburban D.C.

Like everyone else, I'd been seeing (and writing) the headlines about how rates are very low right now, but likely to go higher next spring. So I was ready to lock in lower rates.

The mortgage on my primary residence is with Washington Mutual, so I waited until Chase finished it's consolidation of WaMu before calling to see about refinancing my adjustable-rate mortgage, which unlocks this coming summer. This finally happened in October/November.
The good news is that my home in Arlington, Va., just outside if Washington, D.C., purchased six years ago, is worth more than my mortgage. So, in theory, I shouldn't have any problems refinancing.

So much for theories. After going through the phone prompts, the Chase representative told me that they were too busy to deal with my refinance and transferred me to what turned out to be a division of LendingTree.com.

There seem to be three overall problems:
1) With all the consolidation going on in the lending industry, there is less competition and fewer people answering the phone willing to refinance your mortgage.
2) "Bad" mortgages, where the holders are either unemployed or have a lot of negative equity, are the mortgages that the banks are going to have to spend a fair amount of time on as they decide whether to do a short sale or foreclose or what.
3) The banks may actually make more money in the short term by referring me to a company like LendingTree as a lead than they would if I refinanced my mortgage at a lower rate.

Any wonder that protesters took over Chase's lobby this week?
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