Another interpretation - Posted by Ken (NJ)
Posted by Ken (NJ) on October 29, 2003 at 18:29:31:
I saw nothing in this article banning refinancings under normal circumstances. The part I saw is here:
This is prohibited
“flipping” a home loan; i.e., making covered home loans to a borrower that refinances an existing home loan that was consummated in the last 60 months when the new loan does not have reasonable, tangible net benefit to the borrower considering all of the circumstance, including the terms, the purpose and cost of the loan.
In other words, a refinance has to have a legitimate purpose, not just an opportunity to generate junk fees. Predatory lenders frequently contact their borrowers to refinance their loans. This generates junk fees and closing costs, usually with no net benefit to the mortgagee. In other words, the predatory lender refinances a half point lower, but the closing costs are so high on the loan that the mortgagee never sees any benefit from the refinance. They roll the closing costs into the loan amount, so the principal increases despite the fact that the mortgagee may have refinanced numerous times and has been paying on time.
So I see nothing preventing folks from refinancing. The real question is if the financial market overreacts and interprets the regulation to mean that NOBODY can refinance in 5 years.