How an Underwater Homeowner Got a Refinance

A HARP refi isn't always fast and easy. Ask Joseph DeLucia, who got a mortgage refinance under the Home Affordable Refinance Program. From application to closing, the process took six months.

His refinance rate is a lot lower than the rate on his original mortgage, and the payment is $300 per month less. DeLucia says the savings make the months of frustration and lost sleep worthwhile.

"My advice to anyone would be: Don't give up," he says. "Just hang in there if you really want it."

The HARP refi enables homeowners to refinance, even if plummeting property values have left them owing more than their homes are currently worth. A homeowner can get a HARP refi for up to 125% of appraised value.

DeLucia bought his house on the bay side of the New Jersey shore in 2006. Property values already were declining. In early 2009, DeLucia read on that rates had fallen. He owed more than the house was worth, so a HARP refi was his only option.

He applied with his current servicer May 1, 2009. He closed Nov. 5. In those six months, he spent dozens of hours on the phone, sent scores of emails and engaged in at least two screaming matches.

Here are some tips gleaned from DeLucia's experience.

Expect Nothing to Go Smoothly

DeLucia, an architect who is about to become fully licensed, was ensnared in a mistake from the beginning. He applied over the phone, and the loan officer misspelled his name as "Delusia." It was his servicer's error, but it was up to DeLucia to spend time and effort to fix it. He even sent a photocopy of his driver's license.

He was assigned to a loan officer. Later, he was switched abruptly to another loan officer, who needed documentation to be re-sent. DeLucia faxed documents, and when they were misplaced, he faxed them again. At the end, he was stood up at the closing table three times; the fourth time was the charm.

If Possible, Email Documents Instead of Faxing Them

After a few lost faxes, DeLucia began scanning documents and sending them as attachments to emails.

"That way, they couldn't say, 'We didn't get the fax,'" he says. "I didn't get as much runaround."

Email's electronic trail proved handy.

"There were occasions where they said, 'We didn't get this,' and I said, 'Yeah, you did,' and I forwarded the original message," he says.

Backstop Phone Conversations With Emails

"At some points where I would talk on the phone and I felt that we covered some important ground, I would follow up that conversation with an email restating what we said," DeLucia says.

He especially followed up on rate-lock extensions. On May 1, he locked a rate of 4.75%, and he didn't want to lose it. So every month he called the loan officer to get the rate lock extended. Then, he sent emails to confirm the conversations that had just taken place.

Stay in Touch

For the first couple of months, DeLucia called every week or so.

"But as soon as summer hit and it was starting to get into early fall, I was calling these people every day, sending emails all the time," he says. "I guess they were incredibly busy. A lot of times, I couldn't even leave a message because the person who I was appointed to, their voicemail box was full."

He's lucky to have a desk job where he could dial his servicer, put the phone on speakerphone mode and wait (sometimes more than an hour) for a human being to pick up. He made a point to return emails immediately.

DeLucia realizes that not everyone has this kind of job flexibility.

Anticipate Stupidity

From the beginning, DeLucia stressed he would pay closing costs in cash -- instead of rolling those fees into the new loan -- so he would stay within the allowable loan-to-value ratio.

"I made this point to them on more than one occasion," he says.

Still, DeLucia's servicer rejected his refi application because the closing costs, if rolled into the loan, would put him over the loan-to-value limit.

DeLucia straightened that out, and the loan went back into underwriting for another four or five weeks.

"That was a huge hurdle -- it was a big screaming match on my end," he says.

Outlast the Lender

DeLucia persevered -- through the late revelation that he would need a second appraisal (screaming match No. 2), through the blown appointments for closings and through all the lost documents and full voicemail boxes.

"I bet there's a ton of people in my position who just give up," he says. "Don't let them win."