Although politicians and homeowners have both expressed disappointment in government-backed mortgage loan modification programs, mortgage lenders have managed to spur their own uptick in privately funded refinancing deals.
Attendees at the recent Mortgage Bankers Association conference noticed fewer of their colleagues in the convention hall this year than in years past, but that could actually mean good news for consumers.
Q: Where did all the home loan modifications go?
Roughly half of the 1.3 million Americans who requested mortgage loan modifications under the Obama administration's proposed modification structure failed to qualify for fully-completed refinancing deals. It may be months or even years before we fully understand why such a highly-touted program failed to achieve its goals.
Even though hundreds of thousands of Americans managed to save their homes with the government's help, politicians have already turned the issue into election year fodder.
A: To a mortgage lender's desk
Meanwhile, mortgage lenders have quietly returned to the home refinance business. With little fanfare, home refinance loans have grown to make up four out of five of the active deals on loan officers' desks at major mortgage lenders like Wells Fargo.
The secret, according to mortgage company insiders, is in the higher profit margins enjoyed on refinancing deals now, compared to much lower profit a few years ago.
According to a report in the San Francisco Chronicle, weaker mortgage lenders went out of business or merged, reducing competition among banks and mortgage brokers. Under normal circumstances, market consolidation would force closing costs up and contribute to a rise in interest rates. However, today's mortgage rates have fallen so low that many lenders don't need to spend much money on marketing.
Refinancing - easier than you might think
Consumers ready for refinancing haven't been shy about asking for mortgage quotes, either. Pressure from regulators and shareholders has greased the wheels for loan officers that want to make some money while helping their communities recover from the financial downturn.
While not every property will qualify for a refinance deal, it can't hurt to hop online and shop rates. Let your current mortgage lender know that you're shopping around, too. You won't have to rely on a loan officer's sense of compassion or community if they're hungry to cash in on commissions from upfront closing costs.