Whaddaya DO all day: PenFed mortgage refinance

[Nords]

The closing was recorded today, so I think now it's safe to talk about it.

I'm starting this thread to remind myself why I should never ever ever refinance again. So thanks in advance for reading along, and I hope this lengthy post is entertaining as well. Maybe one day I'll even see the humor in it.

We just closed a PenFed refi on a 3.625% fixed 30-year mortgage. It cost us their 1% origination fee, 1.125 points, and $1940 in closing costs. We dropped our monthly payment by over $200, though, so the refi will pay for itself in four years. (I'll pay off this mortgage right after my 80th birthday.) Refinancing has been driving our ER: my COLA'd military pension has risen by $713/month (27%) in the last eight years, but our real lifestyle boost has been dropping our mortgage payment by over $1140/month (40%) over the last decade.

Last August we noticed that rates were dropping below our old mortgage rate. Way back on 15 Oct, PenFed's website offered a 3.875% 30-year fixed-rate mortgage for 0.5 points. Maybe the Fed's QE2 will bring rates back down this low again someday, but it was the lowest credible rate we'd seen anywhere and we thought they might even have made a mistake in posting it. Even better, the final step in their online application offered the (unadvertised) 3.625% for a bit more in points. We signed the paperwork, scanned & e-mailed it back, and requested a 29 Nov closing. Six weeks sounded pretty reasonable.

By the way, PenFed's website mortgage application is great. They use it to generate ALL of the verification forms and closing paperwork, which means that nobody else besides me has to get the Hawaii names right. So I thought we were way ahead of the usual mortgage-spelling problems.

But we're getting what we've paid for, and the customer-service pain quickly started. The first thing the PenFed supervisor did was to "confirm" the wrong interest rate (3.875% instead of 3.625%). When I offered to scan & e-mail the website application's final printout he said "Oh, yeah, sorry, our mistake." He corrected the numbers and passed the updated loan paperwork to the alleged "senior loan processor", or SLP as I'll call her.

The SLP e-mailed me a day later to inform me that there would be a 0.625% charge for "changing" the interest rate. She actually admonished me in her e-mail "Our rates change every day, there are provisions for this. So please don't review rates once you have locked. There are fees associated with this." I e-mailed the supervisor. He e-mailed the SLP. Everyone reassured everyone that the rate was really going to be 3.625% for 1.125 points. No changes, no penalties. Great. Let's get on with it. I asked them to tell me when the appraiser would contact us.

The day after we received our verification letter (20 Oct) I scanned & e-mailed her the 16 documents she'd requested. (Scan/e-mail takes way less time than faxing, especially when you can get a PDF of a brokerage statement.) I heard nothing from her for over two weeks. Finally on Fri 5 Nov she e-mailed "Please provide a mortgage statement and the tax bill and the home owners insurance for your rental property. I am trying to close you [sic] loan on 11/20. Please expedite."

"Expedite"? Me?!? So I scanned & e-mailed it that afternoon... just in case she was staying late on Friday or working weekends. I also asked her once again to tell me when the appraiser would contact us. I asked her for an estimate of closing costs. I told her I hadn't heard from the title company yet but that I didn't think they'd be open on Saturday 20 Nov. I told her that I'd help things along by depositing our estimate of the closing costs into the title company's escrow account to make sure my check cleared before closing.

10 Nov, five days after I "expedited", I received her reply to my questions: "The tile [sic] company will come to your home up to 7.00 Pm [sic]. Thanks ".

Well, by then I'd talked with the title company and given them an escrow check. Home closings might have happened in 2005's refi gold rush days, but it wasn't going to happen on any future Saturday because the title company wasn't open on weekends. The title company guy thought that 7 PM on my back lanai was pretty funny, though, and he offered to bring the beer if I'd bring Ms. SLP. (He must not get out much either.) So I e-mailed the title company's update to SLP (well, except the part about the beer and the blind date) along with a request to know when the appraiser would contact us. Just in case you're keeping track of appraiser requests, that was #3.

Her response on 11 Nov: "We will try to close by 11/19. I Am [sic] a little perplexed about the escrow, what kind of check are you talking about. This is a refiance [sic] loan. Please advise. Thanks."

My reaction was "Holy cow, PenFed thinks we want to roll all the closing costs into the loan as part of the refinance. Noooooooo!"

I e-mailed my thanks for her clarification on the closing date and stated that we wanted to pay all closing costs from our own separate funds, and that I would really really appreciate an answer to my appraiser question. Because after all there were only five more working days for the appraisal to be finished in time for a Fri 19 Nov closing.

Her response: "I sent the note to the appraisal team, I will let you know what the manager says about the appraisal. The volume is extreme every where [sic] so we appreciate your patience. I will keep you posted. Thanks "

SLP was clearly struggling to keep up, so I gave up on her and left the supervisor a long voicemail.

All of PenFed must've been working on Veteran's Day. He called back with the news that PenFed doesn't actually handle closings or appraisals. They subcontract their closings to a Pittsburgh national title company, which isn't licensed in Hawaii ("national"?!?), so they'd sub-subcontracted with our local title company. PenFed had also sent out the appraisal request to yet another subcontractor whose status was "on hold". He'd since learned that meant the Mainland subcontractor had contacted the local appraiser but the appraiser hadn't gotten around to us yet. (Appraisers apparently don't worry about SLP's closing plans, either.) He said he'd check on the appraiser.

The supervisor was a little curious why I would want to put a bunch of money in an escrow account since PenFed wasn't planning to pay our property taxes & insurance for us. I explained to him that we didn't want an escrow impound account, either, but that Hawaii title companies open escrow accounts (that's the word they use, "escrow") to hold funds for closing and that the funds have to actually be in the account before the day of the closing or else a cashier's check has to be written from a local bank, but PenFed and NFCU are not "local" banks. There was an extended silence as he processed this new information, and he eventually asked if this was a Hawaii custom. I affirmed that. He said he had made sure that SLP understood our loan amount and that he'd send over a HUD-1 estimate of the closing costs as soon as he heard back from the appraiser.

[Notice that now I've had a conversation about property taxes and insurance premiums with two people, but nobody at PenFed actually discussed how those would be paid. It turned out they were saving that surprise for the closing.]

He also agreed that we weren't closing on the 19th, 20th, 22nd, or probably even the 29th. The "good" news was that the loan rate was locked until 13 January.

The appraiser called next morning (Friday 12 Nov) at 7:30 AM for a noon appointment, actually showed up at noon, and was done by 12:30. I gave him a copy of the floorplan with dimensions, so he was ahead of the game and he said he'd e-mail the whole appraisal to PenFed by the following Tuesday. Charlie Lum did a great job and I think he's an excellent appraiser. At least once someone actually puts things on his schedule.

Absolute silence ensued from PenFed for the next 18 days. They never even confirmed they got the appraisal. It was driving me nuts. Then on 30 Nov I got the following e-mail, which I'll quote verbatim without a bunch of [sic]s:
Quote
FW: IMAGE from Internet FAX
Mr. Nords, these are thee final findings, please complete this form
and submit to the below information. Thanks

The "thee final findings" attachment ("the"? "three"?) was a PDF of two IRS forms requesting transcripts of our tax returns. They were the same forms that we had sent back on 21 Oct-- nearly six weeks ago!!

Another voicemail to the "supervisor". Another e-mail back from him. Turns out she couldn't find our original requests so she decided it was easier to have us fill out new ones. He said she'd call next morning with an update on closing. Of course after getting yelled at by the boss and then having to spend more time on the phone with me, maybe they're going to reassess that type of decision next time they can't find their paperwork.

You local guys know what happens when a Mainland business promises to phone you next morning. Sure enough, at 5 AM HST (10 AM their time) my phone rang. SLP said that they had everything they needed (because they had it over a month ago!!) and they'd scheduled closing for a week later on Wed 8 Dec. She confirmed the loan amount and the interest rate.

PenFed didn't disappoint me at closing. At the last minute they slipped in a form that basically said "Oh, yeah, by the way we need you to pay your entire year of homeowner's insurance premiums ahead of time, even though your policy doesn't renew for another month. And while you're at it, why don'cha get ahead on your property-tax payments too... six months should do it." Sonsaguns never said a word about it during the entire process, and it was never on any of their preliminary paperwork, but it showed up on the HUD-1 closing statement. The good news is that the title company trusted me enough to go out on a limb and take a personal ("non-local") $2124 check, because we sure weren't going to be able to do it from an ATM and I didn't want to run across town twice to get a cashier's check.

The closing documents included yet another copy of the two IRS forms requesting transcripts of our tax returns.

First Hawaii Title was the best part of the whole refinance (although they didn't have to work very hard to look better than PenFed) because they gave us a 25% "frequent refi" discount on their processing fee and on reissuing the lender's title insurance. I'm glad they didn't get all bureaucratic about the cashier's check, either, but that would have wasted a lot of their time too.

PenFed is charging us a $25 recording fee to re-subordinate our old PenFed HELOC to our new PenFed mortgage. When I started kvetching, the title company guy said that if the HELOC had been with another company then we would've been charged a couple hundred more bucks to prepare the subordination paperwork before we paid the $25 to have it recorded. But he thought it was kinda cheesy of PenFed too. Maybe he envied their chutzpah.

If you're doing (or contemplating) a PenFed refi, then PM me and I'll give you the name of the supervisor and the senior loan processor. The supervisor got off to a rocky start and seemed out of touch, but once he knew about problems he took care of them. However you may want to avoid the loan processor. If this had been "my first refi" then I would've given up in frustration and confusion.

I'm glad that rates can't possibly get any lower, that this is our last refinance, and this time I really really really mean it. Again.

[brewer12345]

Amazing. I think you were the victim of 1) extremely high refi volume and 2) a US bank not accustomed to the way things are in the Kingdom of Hawaii. For the record, my experience last year was almost the exact opposite. PenFed wanted every conceivable piece of paperwork, but oncethey got it, the rest of the deal just sailed through even though I was on the road for business and out of the country on vacation much of the time. I wonder if it had to do with the fact that I took a 5/5 ARM (which they generally hold in portfolio) and you took a 30 year fixed loan (which they flip out the back door to the GSEs the moment the ink is dry)?

[SecondCor521]

My PenFed refi went really smoothly back in spring 2008. I have read on other websites that the quality of their SLPs varies a great deal. Sounds like you got quite the lemon.

2Cor521

[flyfishnevada]

Longest post ever! I wish we could refi even if we had to go through all that. We live in such a sparsely populated area that appraisers can't get comps and no one will touch us. Never say never.

[Helen]

Thanks for the post, Nords. I used them for a pre-approval but decided to pay cash for the house.

It is nice to skip all the paperwork and hassle.

[mnopqr]

Geez. What a hassle. I think you were very patient. We were thinking of refinancing but first I decided to call our mortgage holder (our credit union) and see if there was anything they could do. Two weeks later, they called back and offered to drop our 4.75% rate to 4.00% for a $500 fee, but without doing any re-financing documentation, or changing the term or amount of the loan. (This was their current rate at the time (Aug/Sep) on a 15 year mortgage, with no points or fees.) Only our monthly payment changed. I was surprised and thrilled.

[Nords]

I think if I'd been blissfully ignorant of how the process should have gone then I wouldn't have noticed anywhere near as many problems.

We talked to our previous mortgage holder about lowering the rate, but they wouldn't budge. I guess they feel they make more money from new mortgages & refis than they would from a quick $500.

Brewer, I think you're right about making a loan that's easily sold. To their credit, PenFed believed that the U.S. govt would continue to pay my Navy pension-- unlike the refi we did with a local bank.

[deserat]

Quote:

Originally Posted by Nords ..... I'm starting this thread to remind myself why I should never ever ever refinance again........extra stuff for the story...... I'm glad that rates can't possibly get any lower, that this is our last refinance, and this time I really really really mean it. Again.

Promises, promises ........

[jblack]

Ouch. Just last week we did our PenFed closing on a 15 yr 3.625% loan with 0 points and everything went like clockwork thru the whole process. There might have been a few weeks where I didn't hear anything from them but when I emailed to check status the responses came promptly.

It did seem like they were quite busy with volume but fortunately we had a decent loan processor.

[brewer12345]

Quote:

Originally Posted by Nords To their credit, PenFed believed that the U.S. govt would continue to pay my Navy pension-- unlike the refi we did with a local bank.

Considering their core clientele, that should be a no-brainer for them. I know I get the third degree from Navy Fed every time I talk to them when they ask about me not being a gubmint employee.

[LOL!]

NYTimes blog about refinancing with many reader comments about the woes and timing: Be Cynical About the Refinance Process - NYTimes.com

My mortgage company sent me a teaser about refinancing this week that showed rates from late October. Then they called me last night to ask me to refinance, but the teaser rate was gone. A quick check at mortgageprofessor.com showed the refinance would cost me money which was surprising since the rate was lower, but I guess not lower enough.

The rep was irritating enough that I am just gonna pay off my mortgage next week.

[Texas Proud]

Nords....

Let me tell you about my sister's refi with PenFed.... her went pretty smooth like Brewers... even though it was a 30 year mortgage...

They did have a lot of back and forth with some paperwork since her husband had died... but got that resolved... also a few problems with GM who was servicing her mortgage (maybe GE... can not remember)... there was a few problems with rates changing and fees for things that should not have been... but my sister just paid them and went along for the better rate...

After closing etc... the FUN begins....

They want to file and then 'discovered' that this was a refi of a refi of a refi... and that my BIL had taken cash out of the last refi.... and PenFed does not do these kind... SAY WHAT

The old loan had been paid off... and PenFed said they would not honor the new one... they wanted her to 'get back' her old loan... I told her to tell them to get stuffed as they signed a contract... but my sister would not do it as PenFed was playing hard ball... there was paper work that had to be done and she made PenFed pay all costs etc... and I think she got back all of what she paid... so her refi was now a reverse refi....

She did get GM or GE to refi the loan after they had reinstalled it... but not at such a good rate... but she was happy....

[Keim]

Quote:

Originally Posted by LOL! The rep was irritating enough that I am just gonna pay off my mortgage next week.

This sounds VERY familiar to what I did a few months ago. "You want me to pay how much in closing fees? I think I'll just pay it all off, thank you."

[Nords]

A fitting coda to this saga:

I've been logging in to our PenFed accounts every few days to see whether they've lost posted the mortgage. Today it showed up with an ad box immediately underneath:

Quote:

Am I eligible for the Homeowner Affordability and Stability Plan? Click here to find out *** Your mortgage loan is not owned by Fannie Mae *** Assistance for borrowers facing hardship: You may qualify for our in-house Loan Modification program. https://www.penfed.org/pdf/accountsf...mortmodify.pdf

They have all the mortgage details correct, but I think I'm going to pass on this "opportunity"...

[Kamwak]

I had a nightmare with CitiBank. Was attempting to refinance my 1st and 2nd mortgage...both of which were currently with Citi. The delays and request for information and re-requests for information went on and on...over 100 days. I finally sent a letter to the processing unit head and described my experience and requested a refund of my upfront processing costs. Never heard a word from them but did after about 10 days saw the money was back in my checking account.
Kamwak

[brewer12345]

Quote:

Originally Posted by Nords A fitting coda to this saga: I've been logging in to our PenFed accounts every few days to see whether they've lost posted the mortgage. Today it showed up with an ad box immediately underneath: They have all the mortgage details correct, but I think I'm going to pass on this "opportunity"...

Fannie/Freddie likely does not own your loan yet because they have not actually sold the loan just yet. Give it another month or two.

[Nords]

Quote:

Originally Posted by brewer12345 Fannie/Freddie likely does not own your loan yet because they have not actually sold the loan just yet. Give it another month or two.

Yep. I think I can relax now.

They'll sell the loan, but they swear they'll keep the servicing. I'm not sure I care either way, although this is the first time I've ever been in a position to have a long-term relationship with a mortgage...

As part of the closing paperwork I signed up for EFT mortgage payments from my NFCU account, but I'm going to be all over both websites for that first one to make sure PenFed has done their part.

[LOL!]

Our mortgage was bought and serviced by WellsFargo where we have accounts.

I have to write that the servicing was trivial and painless. One could request a "payoff amount" at any time on the site. The day immediately after payoff the amount is shown as "PD IN FULL".

BTW, rather than "peace of mind", it feels like the most stupid financial decision I ever made.

[Thingamajigger]

thanks for the discussion OP

I have a similar refi pending ... although I missed the 3.85, I locked penfed at 4

any reason why you were so insistent on not rolling the closing costs into the loan?

does it make any difference to pay cash for the costs?

[Nords]

Quote:

Originally Posted by Thingamajigger thanks for the discussion OP I have a similar refi pending ... although I missed the 3.85, I locked penfed at 4 any reason why you were so insistent on not rolling the closing costs into the loan? does it make any difference to pay cash for the costs?

I had a 1980s refi where the lender/servicer had changed the papers (without checking with me) to roll the closing costs into the loan. Back then I'd set myself up for a last-minute closing before going to sea for four months so when I saw the ambush I didn't have time to start over. The junk fees were part of the package so they couldn't be negotiated without changing the loan amount. A year later I was notified that they'd had trouble making payroll and had been dipping into their clients' impound accounts instead of paying our property taxes, and a few dozen of us had been slapped with delinquent-tax liens.

So this time it was an emotional flashback to those old problems. PenFed's communications had been so poor that I wouldn't have been surprised at the mistake.

I still don't like rolling closing costs into the loan because you can lose the ability to dicker over fees at closing, or even fix a simple mistake like charging a recording fee twice. We'd also asked the title company to reissue the old lender's title-insurance policy (it had only been a couple years since our last refi) and we inquired about a "frequent refier" discount. I think paying cash gave us the negotiating power to get those discounts.

I'm also not sure whether "rolling the closing costs into the loan" equates to "cash-out refi". I know that the cash-out underwriting standards are much more of a hassle than just starting the new mortgage at or slightly below the old mortgage balance. I don't mind continuing to pay it down instead of taking more out. After 10 years of restarting the clock, we've effectively turned our original mortgage into a 40-year loan anyway.

Aside from all of those issues, we've never considered rolling the closing costs into the loan because the payback on the closing costs (from lower mortgage payments) has always been less than a couple years. This loan's payback stretches out a little further-- four years-- but we're pretty sure this is our last primary residence.