Indymac reduced my client's mortgage rate from 7.850% to 5.750% just because we asked.

Can we get a little more detail on the content of the letter? Did you really "just ask?," or was there a somewhat subtle or very overt notice that without a refi, they may have another foreclosure or BK'd borrower on their hands?

Was it a full refi (30 years from now to pay off), or just a rate adjustment?

I wonder if lenders are doing things like this to work their books: Look, we got a "bad" loan cleared off the books (possibly without showing a loss if the refi covered missed payments & accrued interest on the old loan), then add a new "good" loan (for now, anyway).

DavidScubadiver said: ArbolLoco, Kudos to you. First, you are representing your client or friend and did a wonderful thing.
Second, you are advising that people who are stuck at a high rate may be able to "refinance" without the cost of refinancing, just by writing a letter. That is wonderful news.

Heck, you might be able to play off of the $0 closing offer at BoA, and simply ask your current lender to refinance you in your letter, at $0. Maybe they will bite for whatever reason.

You are awesome. Now, if my mortgage was not at 5.5%, I'd get right on writing that letter. But I bow down to you, nonetheless. Nice nice nice.

no he is not saying to "just write a letter" he is saying to stop paying your mortgage for 2 months and lose 100-200 points on your credit score with a slight chance that the bank may possibly lower your rate. If they don't lower your rate you are screwed.

win333 said: Woodchuck312 said: DavidScubadiver said: ArbolLoco, Kudos to you. First, you are representing your client or friend and did a wonderful thing.
Second, you are advising that people who are stuck at a high rate may be able to "refinance" without the cost of refinancing, just by writing a letter. That is wonderful news.

Heck, you might be able to play off of the $0 closing offer at BoA, and simply ask your current lender to refinance you in your letter, at $0. Maybe they will bite for whatever reason.

You are awesome. Now, if my mortgage was not at 5.5%, I'd get right on writing that letter. But I bow down to you, nonetheless. Nice nice nice.

no he is not saying to "just write a letter" he is saying to stop paying your mortgage for 2 months and lose 100-200 points on your credit score with a slight chance that the bank may possibly lower your rate. If they don't lower your rate you are screwed.

But you can't figure out another way to get your score to drop that isn't perminent. Are you kettle or teapot?

Not sure where that is coming from but since you seem to be a guy who can talk the talk and walk the walk why don't you test out the theory and post the results for us big guy.

Stop paying your mortgage for 2 months and send a letter the bank(please post a copy for us to see too) and let us know the results and also your before credit score and after credit score.

win333 said: Woodchuck312 said: win333 said: Woodchuck312 said: DavidScubadiver said: ArbolLoco, Kudos to you. First, you are representing your client or friend and did a wonderful thing.
Second, you are advising that people who are stuck at a high rate may be able to "refinance" without the cost of refinancing, just by writing a letter. That is wonderful news.

Heck, you might be able to play off of the $0 closing offer at BoA, and simply ask your current lender to refinance you in your letter, at $0. Maybe they will bite for whatever reason.

You are awesome. Now, if my mortgage was not at 5.5%, I'd get right on writing that letter. But I bow down to you, nonetheless. Nice nice nice.

no he is not saying to "just write a letter" he is saying to stop paying your mortgage for 2 months and lose 100-200 points on your credit score with a slight chance that the bank may possibly lower your rate. If they don't lower your rate you are screwed.

But you can't figure out another way to get your score to drop that isn't perminent. Are you kettle or teapot?

Not sure where that is coming from but since you seem to be a guy who can talk the talk and walk the walk why don't you test out the theory and post the results for us big guy.

Stop paying your mortgage for 2 months and send a letter the bank(please post a copy for us to see too) and let us know the results and also your before credit score and after credit score.

Did you not read my earlier post about showing alot of AOR balances and trashing your score, THEN right the letter.

pay-off AOR and all is well, WHY are you POUNDING on OP. He didn't make the situation, he just let YOU and US know that there is possibly a way to get the refi done.

I have 3 of these LIAR loans, In the fine print, I paid 7 3/4 over my index on the 1st adjustment. I had no clue, I knew rates would be the same so I had nothing to worry about.

7 3/4 over the INDEX was highway robbery, I pay them on the 15th of every month and WILL NEVER pay them 1 minute early. My loan also has a cap per year the loan can increase BUT NOT FOR THE 1st INCREASE. The 1st INCREASE IS UNCAPPED, so my loan jumped from 7% to 14 1/2 on the 1st increase.

So if I can stick it to them I WILL, also now I have to many properties to be able to REFI. NO BANK will touch me over 10 properties. So the IDIOT who said " Just do a no fee REFI" has no clue how the system works.

Try to get a NO FEE refi if you've been late or can't requalify. I'm self-employed so the banks don't look at my REV. they want to see INCOME 300,000 per year REV isn't good enough to REFI me and save me 50% of my payment. I have a 750 FICO and about 60% LTV.

They're all a bunch of CROOKs, So I take there 0% and shuve it back up in them! I can borrow more money on 0% cards with NO DOCs than I can on a freakin income producing property.

Oh I see now. So we are the "idiots" because we are financially responsible with our money? lol ok.

I wasn't aware the banks forced you to take their loans. Did they put you in a choke hold and make you sign on the dotted line? You must have been much smarter than the rest of us and avoided reading the terms on your loans as well.

Don't worry i'm sure the gubbamint will bail you out of your stupidity with our money.

LordKronos said: As much as it pains me to agree with win333 and his tourettes ridden posts, did you even read what he was suggesting? He was saying rather than missing a few payment and harming your credit permanently, you could try to "damage" your credit with an App-O-Rama and then request the lower rate. They may see the low score and all the balances, conclude that you are about to BK, and give you a lower rate to mitigate the damage and try to keep you from defaulting.

Theres nothing wrong with simply asking for a lower rate, and there no harm to you (plus, you make $ on the AOR). Yeah, doing a straight up refi would be better, but that's not really an option for someone who is now upside down on their mortgage, or where one spouse lost a job and they can no longer meet the required debt-to-income ratio.

Well he wasn't asking me about his solution, he was asking why I was pounding on the OP and his theory. As far as I am concerned Win333's solution is much better than OP's and I'll give him that much credit. But this topic is not about that. It is about the absurd conclusion the OP has made from 1 person and suggesting that others should try it as well.

SnoopDoug said: ArbolLoco said: No fancy feat here, I just sent them a letter, and they immediately sent her back a form letter with the new rate offer... a savings of about $950/mo. just because we asked.



But...did the letter from Indymac have postage on it?

that's funny

Woodchuck312 said: lhendricks92 said: What's absurd about requesting a lower rate? Worst case - THEY KEEP THE RATE THE SAME.

Oh my god some people are so dense. For the 5th freakin time he is not just saying to request a lower rate. He is saying to stop paying your mortgage for 2 months and then request a lower rate.

Like, OMG, I'm so dumbbbb!

I agree that purposefully trying to trash your credit for the possibility of a rate reduction is a bad idea, but the message I'm taking from OP is this: If you know someone who has a high rate mortgage, it may be possible to negotiate a lower rate without refinancing. This is especially true if the mortgagee is showing signs of default. Regardless, OP is not an "idiot," and it costs nothing to try.

Personally, it will be a sad day when I make the last payment on my 4.625% fixed.

I am from the school of 'if you don't ask you don't get' This is a great time to work over the lenders. They would much rather take a reasonable rate on a high risk loan that is paying, then to have one more repo.

I am in Atlanta market, I am buyinr repos. I have ben working the banks over on the other end.

Woodchuck312 said: Well he wasn't asking me about his solution, he was asking why I was pounding on the OP and his theory.

you: stop paying your mortgage? thats a terrible idea
him: well...there might another way that doesn't involve missing a payment
you: well, if you are such a big guy, prove it. Stop paying your mortgage.

Besides, you seem pretty rough on the OP. Reread the OP. It doesn't say "hey everyone...heres how to save some money: stop paying and hope for a lower rate". It says "this worked for my client, so it might be worth it for others. Anyone else have any experience with something like this". He was merely providing a data point, hypothesizing that it might apply elsewhere, then asking for a discussion on the topic.

Woodchuck312 said: lhendricks92 said: What's absurd about requesting a lower rate? Worst case - THEY KEEP THE RATE THE SAME.

Oh my god some people are so dense. For the 5th freakin time he is not just saying to request a lower rate. He is saying to stop paying your mortgage for 2 months and then request a lower rate.

So come up with a better idea, instead of being a PITA! Why don't you try to help?

lorcha said: LordKronos said: As much as it pains me to agree with win333 and his tourettes ridden posts, did you even read what he was suggesting? He was saying rather than missing a few payment and harming your credit permanently, you could try to "damage" your credit with an App-O-Rama and then request the lower rate. Feel free to try win333's method after your next A0R, but it's been my experience that you will never get the time of day from a bank's loss mitigation department unless you are in arrears. I guess they just figure as long as you are current, why do they need to negotiate?

In this market, MAYBE if it looks like a duck they might BLINK and think you are going to be the next foreclosure that lowers their portfolio value. Normally your foreclosure is no sweat off their backs, but right now THATS WHATS KILLING THEM!

This market has changed the rules from what we are use to.

lorcha said: win333 said: In this market, MAYBE if it looks like a duck they might BLINK and think you are going to be the next foreclosure that lowers their portfolio value. I'll never say never, but tell me, win333, from the bank's perspective, what does the bank gain by offering a loan modification on a performing loan? What does the bank have to lose by waiting until the loan actual goes delinquent?

I can't think of a single thing.

It's a business, why would they lower the rate for the OPs client. You just never know, i'm not saying it will work but geez nothin to lose.

I wasn't really looking for an answer to why they lowered OPs clients rate, WE CAN'T FIGURE THAT OUT, just knowing it's possibly can help.

Why do creditors give credit cards when you have 30 INQs on 1 report, who knows, who cares! Just give me mine.

win333 said: It's a business, why would they lower the rate for the OPs client. Because OP's client wasn't payin'!
i'm not saying it will work but geez nothin to lose.I agree with you 100% You have nothing to lose by trying.
I wasn't really looking for an answer to why they lowered OPs clients rateAnd that wasn't even what I was asking you about. My question is "What is the advantage to the bank to take a loss on a performing loan before it goes delinquent?" There is nothing the bank can do pre-delinquency that it can't do post-delinquency. For all the bank knows, maybe you've got a rich uncle who doesn't want you to be homeless.

Anyway, I'm just describing my experience dealing with banks. I hope you are able to negotiate a great post-A0R loan mod for yourself.

lorcha said: win333 said: In this market, MAYBE if it looks like a duck they might BLINK and think you are going to be the next foreclosure that lowers their portfolio value. I'll never say never, but tell me, win333, from the bank's perspective, what does the bank gain by offering a loan modification on a performing loan? What does the bank have to lose by waiting until the loan actual goes delinquent?

I can't think of a single thing.

lorcha: that's an excellent question. If you express the setup (owner, lender, mortgage, payments, missing payments, etc) as a game tree, what you are saying is that it is never optimal for the bank to agree to reduce the rate before the owner has missed payment.

I disagree with you on two counts:

1. The owner can take his business elsewhere. So the bank has an incentive to lower the rate close to the prevailing rates, but slightly above. This assumes there are no pre-payment penalties,

2. If the bank calculates that there is a high probability that the owner will foreclose on purpose, then the bank has to evaluate their net payoff in case that happens in x months vs. reducing the interest rate now. What if the owner writes a letter stating that he has experienced unexpected reduction in income and will be unable to meet the mortgage payments UNLESS the bank reduces the price? Add to that sufficient conditions, such as purchase-money loan w/ no recourse beyond the collateral, and you have the ingredients for the owner to drive the game tree to an outcome that puts the bank at a significant disadvantage. Of course, the owner has to be willing to take the fall in credit scores. But in the view of the credible "threat" (unless the lender reduces, he is NOT going to pay) the bank has a decision to make that can tip either way.

tolamapS said: 1. The owner can take his business elsewhere. So the bank has an incentive to lower the rate close to the prevailing rates, but slightly above. This assumes there are no pre-payment penalties,This is NOT what we are talking about here. And I think you'll find that most lenders will do a low-cost or zero-cost refi for qualified borrowers. Again, this is totally irrelevant to the delinquent borrower or A0R-doing borrower case.
2. If the bank calculates that there is a high probability that the owner will foreclose on purpose, then the bank has to evaluate their net payoff in case that happens in x months vs. reducing the interest rate now. What if the owner writes a letter stating that he has experienced unexpected reduction in income and will be unable to meet the mortgage payments UNLESS the bank reduces the price? Add to that sufficient conditions, such as purchase-money loan w/ no recourse beyond the collateral, and you have the ingredients for the owner to drive the game tree to an outcome that puts the bank at a significant disadvantage. Of course, the owner has to be willing to take the fall in credit scores. But in the view of the credible "threat" (unless the lender reduces, he is NOT going to pay) the bank has a decision to make that can tip either way.But why do it before the loan is even delinquent? Maybe borrower finds another job, maybe he gets the money from his parents, or a credit card, or whatever.

I am very well-versed in the reasons why banks negotiate with delinquent borrowers, which is what you tried to answer. I see nothing in your answer that tells me why a bank should modify a loan that is performing. DavidScubadiver at least gave an answer to the question. I happen to think his answer is overstating the pressure that banks feel to keep loans current, but at least he answered the question, as asked.

You have answered a separate question--one that I already know the answer to.

lorcha said: But why do it before the loan is even delinquent?

Because once delinquent, w/ high probability the borrower will choose foreclosure over getting the loan current.
Once delinquent, the damage to the credit is mostly done, and now the borrower is simply maximizing net present value of cashflows.

Another reason. If borrower asks for rate reduction, and the bank refuses to do so, borrower makes up his mind that he is going to: (1) become delinquent, (2) live rent-free for a while, (3) make up the lost equity as a result of foreclosure, all at the expense of his credit.

win333 said: 1,000,000 30 yr fixed at 1% is about 1,000 per month. I bet I can make my payment then.Check your math.

win333 said: Stay tuned, I'm waiting for my 1% mortgage, then I'll REFI! 1,000,000 30 yr fixed at 1% is about 1,000 per month. I bet I can make my payment then.

I would LOVE to pay back a $1,000,000 loan at $1000/month for 30 years. Shoot, can we make it one billion dollars?

Really I was thinking of an interest only loan, my last homes start rate was 2.60% interest only. Thats the kind of rates that are in japan, maybe we are next.