Refused a Refi based on succesful 13? Legal?

[LawyerLynn]

Here's the issue. I filed a Chapter 13. I adhered to my plan and was successful and received a discharge over 2 years ago. The Bankruptcy no longer appears on my Credit Report. I had a home mortgage at the time of filing with USAA federal savings bank. The Mortgage was handled OUTSIDE the bankruptcy. I have not missed or even been late with a mortgage payment in over 20 years with them. I called today to talk to them about a mortgage refinance and was told that because they lost ~$5,000 that I owed them on my Visa card as a result of the bankruptcy, they would not discuss a refinance with me and that it was their policy to deny all credit to anyone who had caused them to lose money in the past. The bank guy I spoke with said "we can't legally make you pay the $5,000 back because it was discharged in Bankruptcy, but we will not offer you any new products or refinancing opportunities unless you do pay it all."

Can they legally still hold my bankruptcy over my head and refuse to discuss a refi with me this way? Again, my home mortgage was not involved in the bankruptcy, but they still refuse to refinance it because of the credit card debt that was discharged.

[tobee43]

the sad but true news is these lenders can do whatever they want and deny you for whatever reason. maybe you can try a different lender?

[HHM]

Short answer, yes. As pointed out, so long as the denial of lending was not discriminatory (e.g. race, etc), no bank is "required" to lend to you. Conversely, you are not "entitled" to a refi just because you want one.

[Logan]

Here's the issue. I filed a Chapter 13. I adhered to my plan and was successful and received a discharge over 2 years ago. The Bankruptcy no longer appears on my Credit Report. I had a home mortgage at the time of filing with USAA federal savings bank. The Mortgage was handled OUTSIDE the bankruptcy. I have not missed or even been late with a mortgage payment in over 20 years with them. I called today to talk to them about a mortgage refinance and was told that because they lost ~$5,000 that I owed them on my Visa card as a result of the bankruptcy, they would not discuss a refinance with me and that it was their policy to deny all credit to anyone who had caused them to lose money in the past. The bank guy I spoke with said "we can't legally make you pay the $5,000 back because it was discharged in Bankruptcy, but we will not offer you any new products or refinancing opportunities unless you do pay it all."

Can they legally still hold my bankruptcy over my head and refuse to discuss a refi with me this way? Again, my home mortgage was not involved in the bankruptcy, but they still refuse to refinance it because of the credit card debt that was discharged.

Get a new mortgage with someone else.

[HHM]

Get a new mortgage with someone else.

Good advice, go some place else.

[cgfromnc]

As stated, yes they can do that so long as that is their uniform policy to all clients (otherwise they open themselves up to discriminatory lending practices) . I agree - just go somewhere else. if you are under 80% loan to value you can go conventional 2 yrs. post discharge on a 13.if you are over 80% you can pay the difference down to 80% of appraisal or go with a FHA loan. Good luck.

[LawyerLynn]

Thanks all, I am going somewhere else. Already been offered a 3.25% new rate on a 15 year fixed with no points. House appraises for $210k and only need to refi $140K so all is well. If USAA doesn't want me, then I don't want them either, I'll advise others to steer clear too.

[tobee43]

Thanks all, I am going somewhere else. Already been offered a 3.25% new rate on a 15 year fixed with no points. House appraises for $210k and only need to refi $140K so all is well. If USAA doesn't want me, then I don't want them either, I'll advise others to steer clear too.

do you mind telling which lender?

[goon]

Thanks all, I am going somewhere else. Already been offered a 3.25% new rate on a 15 year fixed with no points. House appraises for $210k and only need to refi $140K so all is well. If USAA doesn't want me, then I don't want them either, I'll advise others to steer clear too.

See what options they have available, see what rate you can get on a 30 year fixed, and do some amortization calculations ( you can find websites that will do this for you).

Generally from the examples I have seen it is a bad idea to go with a 15 year loan (as long as you can be disciplined in making payments)... The reason is that even thou a 30 year loan typically has a slightly higher interest rate than a 15 year, if you were to get the 30 year loan, and make the same monthly payment amount you would have made with the 15 year loan (the extra going to principal) it will typically be paid off in closer to 8 years instead of 15... with the same monthly payment. This has to do with how the interest is calculated.

We actually had to write software to make these comparisons in a college class I took, was very interesting to see the difference.

[msm859]

See what options they have available, see what rate you can get on a 30 year fixed, and do some amortization calculations ( you can find websites that will do this for you).

Generally from the examples I have seen it is a bad idea to go with a 15 year loan (as long as you can be disciplined in making payments)... The reason is that even thou a 30 year loan typically has a slightly higher interest rate than a 15 year, if you were to get the 30 year loan, and make the same monthly payment amount you would have made with the 15 year loan (the extra going to principal) it will typically be paid off in closer to 8 years instead of 15... with the same monthly payment. This has to do with how the interest is calculated.

We actually had to write software to make these comparisons in a college class I took, was very interesting to see the difference.

Umm I don't think so. A $140k loan 3.25% interest 15 year loan would be $983/month. To pay off the loan in 8 years you would have to pay $1658/month. At 3.5% interest you would have to pay $1,000/month to pay it off in 15 years.

[goon]

Umm I don't think so. A $140k loan 3.25% interest 15 year loan would be $983/month. To pay off the loan in 8 years you would have to pay $1658/month. At 3.5% interest you would have to pay $1,000/month to pay it off in 15 years.

Crap... you are right, please ignore what I said above.

Now I am completely unsure of what I was remembering but something is off, there must have been some other variable involved that I am not remembering (this is from like 15 years ago when I was a teenager).

[goon]

Crap... you are right, please ignore what I said above.

Now I am completely unsure of what I was remembering but something is off, there must have been some other variable involved that I am not remembering (this is from like 15 years ago when I was a teenager).

so I did some digging and found some notes... for some reason the way that they had us calculating it was the 15 year mortgage as semi monthly with interest calculated at each payment ( so essentially the same as a 30 year mortgage but 2 payments a month instead of 1) which makes no sense, so in essence a double payment on a 30 year loan. Now if you made that as one payment each month (ie the second payment going fully to principal) you can end up paying off in 7-8 years... but this doesn't make sense as a real world comparison (other than to say if you are going to make double payments to make sure the second one is going to principal and not just paying ahead).

I am sorry for the confusion I brought to the thread, you would think I would know by know to run the numbers myself and not trust my memory before saying something.....

[LawyerLynn]

do you mind telling which lender?

Sure, I contacted Churchill Mortgage. I learned in my Chapter 13 to live the "Dave Ramsey" way. With the exception of my mortgage, I don't have any debt anywhere. If I can't pay cash for it, I don't get it. I live like no one else now so that later I can live like no one else.

As to payments. I'll be dropping from a 6.25% interest rate on a 30 year fixed to 3.25% on a 15 year fixed. total monthly payment will stay about the same (including insurance and taxes), but the house is paid in full 8 years sooner than currently scheduled.

[tobee43]

Sure, I contacted Churchill Mortgage. I learned in my Chapter 13 to live the "Dave Ramsey" way. With the exception of my mortgage, I don't have any debt anywhere. If I can't pay cash for it, I don't get it. I live like no one else now so that later I can live like no one else.

As to payments. I'll be dropping from a 6.25% interest rate on a 30 year fixed to 3.25% on a 15 year fixed. total monthly payment will stay about the same (including insurance and taxes), but the house is paid in full 8 years sooner than currently scheduled.

thanks! should like an excellent plan! good luck with it, i'm sure it will work out great for you