Ft Worth Star-Telegram
Persistence helps couple cut rate
By JIM FUQUAY

STAR-TELEGRAM STAFF WRITER

When Bill Wolfe and Barbi Beard were shopping for a mortgage in May, they knew two things: They didn't have perfect credit, but they didn't have to settle for a bad loan, either.

Now the Benbrook couple are moving into a new home financed at a reasonable interest rate, thanks to some informed shopping and persistence.

"If you were somebody who did not have a clue about buying and selling a home, you'd have gotten taken to the cleaners," Beard said. According to some studies, at least one in three borrowers who receive a high-rate loan could have qualified for a market-rate loan.

The couple began their saga in May when they applied for a loan from California-based Countrywide Home Loans, the country's largest mortgage lender last year. On May 11, according to documents Beard and Wolfe provided to the Star-Telegram, Countrywide offered a $150,000 loan at 6.5 percent. Beard said the goal was to make a scheduled Aug. 30 closing on the purchase of their new home.

Countrywide indicated the loan was contingent on the couple resolving several outstanding credit issues, which Beard and Wolfe say they did at a cost of about $5,000.

By the middle of August, however, the loan still wasn't finalized. Then their loan officer referred them to Countrywide's Full Spectrum division. Full Spectrum, according to the company's Web site, offers "subprime home purchase loans and refinance loans to consumers who are self-employed, have less-than-perfect credit and/or do not meet the loan requirements of traditional lenders."

According to company documents and e-mails provided by the couple, Full Spectrum offered two options, including a $155,000 loan at 8.375 percent. And to get that rate, the couple would have to pay 3.25 discount points, or just over $5,000. A point is 1 percent of the loan amount.

Full Spectrum agreed to reduce the rate by 1.5 points to 6.875 percent after four years if the couple made timely payments.

"I came unglued" at that offer, Beard said. "I said, 'I have very good credit. I have debts but I don't have any late payments.' And they're telling me I don't have a choice, I need to do this."

Countrywide spokeswoman Mary Jane Seebach said her company "offered a number of options" at both Countrywide and Full Spectrum in a sincere effort to find an acceptable loan. She said she couldn't discuss the case in detail.

After seeing the Full Spectrum offers, Beard applied to two other lenders. One, Fort Worth-based Colonial National Mortgage, offered a 6.25 percent loan Aug. 22. The couple closed on their new home as scheduled Aug. 30.

On a $155,000, 30-year loan, the difference between those rates is about $224 a month.

Mike Walkenhorst, the Colonial loan officer who worked with the couple, said he can't second-guess Countrywide's judgment of the couple's creditworthiness and the loans it offered. Lenders offer different rates all the time, he said.

"All I can say is there was no creativity involved," said Walkenhorst, who works in Arlington. "Their credit was just OK, but that's why I thought of the loan program I put them in," he said, referring to the FHA-insured mortgage. He said the couple could have received a lower rate if they had had a better credit score, but the interest rate they received included a small premium to help pay for about $3,000 in closing costs.

Walkenhorst said the couple did themselves a big favor by shopping around. Most borrowers, he said, probably would not have had the nerve to drop their lender.

"They got to a place where they felt they were being railroaded," he said. "Maybe the loan officer was busy; maybe it was the best loan available. But the borrowers felt kind of abused because it was late and hard to get another lender to do better."

David O'Brien of Housing Opportunities of Fort Worth said the only thing Beard and Wolfe might have done differently was to clean up their credit before approaching a lender. "When lenders run across people who put the work into getting their credit right, they think more of them" as good risks, said O'Brien, who counsels prospective homebuyers.

But starting with a good understanding of how the process works was exactly the way to start, he said.

"The best protection anybody has is the ability and the tenacity to ask good questions," O'Brien said.