What is a person to do? I recently talked to a client who’s daughter wants Countrywide Mortgage (now owned by Bank of America) to refinance her home to a lower interest rate. She has an excellent credit rating. But because she lost one of the three jobs she was holding, she wanted a loan modification. At this point in the market, she still has equity in the home, which is great; at least she’d not upside down on loan to value.

In keeping with current banking mentally, she was told “Why should we refinance?.. You are making your payments now. If you stop making your payments, we will sit down and talk to you.” Now this woman has a credit score in the upper 700’s. So the question is, should she stop making payments, ruin her credit score and THEN maybe Countrywide will renegotiate her loan?

My advice was to go somewhere else and get another loan. Rates have now fallen below 5% for a thirty year fixed loan and it’s a great time to refinance. With a good credit score, equity in her home, she has a good chance to get a new loan at a lower interest rate.

By the way, there were an average 3,100 foreclosures per day in the U.S. in November, according to RealtyTrac Inc., an Irvine, California real estate data company. That’s triple the 1,000 per day average in 1933, the worst year of the Great Depression, according to the Federal Reserve Bank of St. Louis. So my question is, when are the banks going to learn that they have to work with home owners to stabilize the housing market and help their bottom line?

Here’s some photos of the Great Depression from the Federal Reserve Bank of St. Louis:

The Great Depression Photography

Questions? Email John O’Dell
Real estate broker, civil engineer and general contractor