Or, call me at: When the Obama administration announced what has been dubbed “HARP 2.0” last fall, their intentions may have been good, but it looks like they’ve run headlong into the diminished capacity of today’s mortgage industry. Bank of America has apparently been so swamped by people seeking refinances under the new HARP program that it’s telling some customers to wait 60 or 90 days before applying.
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From Bloomberg:Bank of America Corp., struggling to handle mortgage refinancing after a U.S. program boosted demand, is telling some customers to wait 90 days before starting an application, said two people with knowledge of the policy.
The firm began a reservation system last week that asks those who call during high-volume times if they wish to be contacted again in 60 to 90 days, said two people who requested anonymity because the measure hasn’t been announced. Wells Fargo & Co. and New York-based JPMorgan Chase & Co., the biggest U.S. mortgage lenders, said they aren’t stalling customers.
The delays may push borrowers to other lenders or discourage them from taking advantage of record low interest rates. The government’s Home Affordable Refinance Program, which helps homeowners lower payments, has increased refinance applications and strained capacity at Bank of America, which exited some mortgage lines last year. The U.S. program, now dubbed HARP 2, was broadened in 2011 so more people qualify.
Other lenders are “open for business”, as Bloomberg mentions, but the problems at B of A do illustrate what happens when government stimulus meets the reality of a much smaller mortgage industry. There just aren’t as many people doing mortgage financing these days compared to five years ago.
Obama proposed a new mass refinance program in his recent State of the Union address, but I don’t think the mortgage industry has the capacity to handle that much volume. Because banks often regulate the number of applications they receive with the rates they offer, any mass refinance program could result in significantly higher mortgage rates as well as much longer processing times.
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