Re-fi boom hits Florida but some 'underwater' homeowners still left out

Article Courtesy of The Sun Sentinel

By Donna Gehrke-White

Published August 1, 2012 

Florida is catching up with the national refinance boom, according to the Mortgage Bankers Association, but some local homeowners say they still can't qualify for one of the historic low interest rates.

Refinancing accounted for 77.5 percent of all Florida mortgage applications in June, just 1.5 percent short of the national average, the bankers association reported. A year ago, the Sunshine State's refinancing was 54 percent of all home loan applications compared wih the national average of 66 percent, the association found.

But some South Floridians say they are discouraged from even applying to get a new loan because their homes are currently worth less than what they owe.

Daniel O'Brien and his wife, Karen Sutliffe, said they have been trying to refinance, but are often warned away from even applying to refinance their Oakland Park home that is worth about $50,000 less than what they owe.

"They say we make too much money for one program and not enough for another," Sutliffe said.

"It's crazy," added her husband. "We've never had been late on a payment."

Meanwhile, he said the interest on their adjustable rate went up .25 percent this month to 7.75 percent. 

That's more than double the current national average for 30-year fixed-rate mortgages that plunged to 3.49 percent this week for the first time ever, Freddie Mac reported. Last year at this time, the average rate was almost a point higher at 4.55 percent.

The recent historic low rates have brought on a new national refinancing boom with applications this week hitting levels not seen since April 2009, the Mortgage Bankers Association said. Refinancing now accounts for 81 percent of all home loans, up from 79 percent in June.

Nearly a million families in Florida could save an average of $3,035 a year if they could refinance, according to the nonprofit Center for Responsible Lending.

The center urged the federal government to further expand programs to help Floridians refinance their higher rate mortgages. The current HARP 2.0 program is supposed to help "underwater" homeowners who haven't missed a payment and had loans owned or serviced by secondary lenders Freddie Mac or Fannie Mae.

But Sutliffe said she and many other South Floridians are out of luck they don't have a Fannie Mae or Freddie Mac loan. 

Other lenders have turned away Sutliffe and her husband, she added, because they now make less money: Her husband's business has suffered from the recession and she was laid off. Once she turned 62, Sutliffe said she went on Social Security.

Sutliffe said they wanted to refinance for lower mortgage payments so they wouldn't have to dip as much into their retirement accounts.

Chase's mortgage staff is looking into the situation, said spokeswoman Maribel Ferrer.

"Our modification department continues to work with the family to come up with a possible solution," she said.