Rise in New Jersey Refinancings amid Foreclosed Houses

The number of New Jersey homeowners refinancing their loans has been increasing at a pace that the banks in the state have not been able to handle.

Loan refinancings that used to be completed in less than one month now take two or three months to be completed. Borrowers who thought they could begin saving from the reduced monthly payments find that they need to make the higher monthly payments for more months. Some refinancing applicants have even lost their locked-in mortgage rates after their 30-day or 45-day guarantees expired as they wait for the refinancing application to get processed.

Wendy Nastasi, head of Pompton Plains-based Crossroad Finance Discount Mortgage, said seven of her clients had their rate guarantees expired and they had to wait until mortgage rates dropped again before they pursued their refinancings.

Mortgage lenders explain that there are a lot reasons for the delays in processing refinancings. Having been clobbered by record numbers of repossessed houses, borrowers have been spending more effort and time in screening income and asset documentations.

Another factor adding to processing delays is the new appraisal code. For loans that will be sold to Freddie Mac or Fannie Mae, lenders need to do the hiring of appraisers through third parties such as appraisal management companies. Brokers are no longer allowed by the code to hire appraisers. Oftentimes, low home appraisals also contribute to the delays.

According to loan brokers and lenders, many homeowners in North Jersey do not have a realistic view of the values of their homes. Much time is often spent on renegotiation of mortgage terms if low appraisals come in. Appraisers for homes in the towns of Passaic and Bergen make lower appraisals because these markets are still declining markets.

Keith Gumbinger, a top executive of mortgage rate tracking firm HSH Associates, said banks were suddenly overwhelmed with refinancing work after laying off personnel to cope with the crisis and were hesitant to hire again because of uncertainties in the economy.

Tom Marinaro, head of Ramsey-based mortgage bank Residential Home Funding, said stricter lending requirements also contribute to delays. He explained that he and other lenders now require recent tax documents, pay stubs, bank statements in addition to strong credit scores.

According to the mortgage bankers, the most important development is that they are going back to old-fashioned underwriting, which will do the mortgage industry and the economy more good.

Related Posts:

• Appraisals and Tax Foreclosure Properties
• Federal Homes Agencies Team Up to Fight Unethical Appraisals
• Foreclosure Listing Growth Pushed Down Home Values
• Refinancing Aid for New Jersey Homeowners Facing Foreclosure
• Bank Owned Houses in New Jersey Rose As Job Loss Grew