Harney's Article on "Cash-In" Refi's

The Seattle Times had an article from Ken Harney about "Cash-In" refinancing this Sunday. I thought that the article was great. The article states that there was a major jump in refinances in which borrowers brought money in to the transaction to close. I am seeing this phenomenon and related to the article. They postulated that one of the main reasons for the change was the weak savings rate and the ability for sophisticated borrowers to earn higher rates of interest.

My experience has been that it is more a factor of people that need to refinance for one reason or another that have to bring in cash to bring their LTV (loan-to-value) ratio into the current guidelines. The "New Frontier" that is mortgage lending really has almost no tolerance for high-LTV loans. Many borrowers find that even though they may not be underwater, they just plain don't have the equity required to refinance into the current low rates. The government has made special programs to 'help' people refinance even if their equity has vanished. It's been my experience that the program is mostly ineffectual and that many borrowers are left high and dry.

Particularly hard hit are the condo owners out there. Condo guidelines are particularly restrictive (although they have been loosening a bit lately) and often require lower LTV's then that required for single-family homes.

Long story short- overall, I think it's a good article and recommend anyone out there that is facing this type of situation read it. If nothing else, it will be therapeutic to know that there are others out there that are in the same situation. We're all in it together folks. Things are getting better, it just takes time.