Ask Money

Invitation to a nightmare?

Chris Farrell Feb 14, 2011

Question: Marketplace has run many stories about people who voluntarily entered the Seventh Level of Hell by applying for a government backed refinancing program on their mortgage. That is why I was surprised when GMAC Mortgage (my mortgage provider) sent me a promotion to use the Home Affordable Refinance Program to lower my mortgage payments. GMAC claims it can help qualify me “in just minutes”. Why should I believe GMAC that this is a good offer, and not just a first step leading to hours and hours of frustration? Mark, Rochester Hills, MI

Answer: Yes, Dante would be the right person to describe the government’s high-stress little-relief no-help mortgage modification program.

That said, before tossing away the promotion I would check out the offer from your bank.

It might be a genuine no-fee no-hassle refinancing that is part of the stimulus bill. I’ve posted on it here.

A colleague of mine got a similar offer from his bank. All it took was a few signatiures and he got a no-fee refinancing at a lower rate. The refinancing is limited to homeowners with Fannie Mae and Freddie Mac mortgage-conforming loans. The program is supposed to help folks in financial stress, but banks are also offering it some of their lower risk borrowers.

So, check it out first to if it’s really a no-fuss no-fee refinancing. But if it’s a gimmick or a come-on, toss it.

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