WASHINGTON — Borrowers are rushing to refinance their mortgages at record low interest rates but face unexpected delays as swamped lenders struggle to cope with the surge at a time when layoffs have sharply cut staffing.
Bank of America Corp., which started shedding 7,500 employees after its July merger with Countrywide Financial Corp., recently yanked 300 workers from its home equity line department to help deal with refinancing requests, said Matt Vernon, the bank's national sales executive.
Some borrowers have been told they would have to wait two weeks for a call back from their lenders, said Joy Siegel, a Bethesda, Md., real estate lawyer. "That's incredible considering rates sometimes change on an hour-by-hour basis," she said.
Given the jam, Wells Fargo no longer allows its loan officers to lock in rates for less than 90 days so there's enough time to close the loans, said Bill Malkoun, branch manager at Prosperity Mortgage, a joint venture of Wells Fargo and Long & Foster.
"It's as if the entire nation woke up one morning and decided they all wanted to refinance at the same time," Malkoun said. "Sometimes I pick up one message, return that call and then find four more waiting."
Refinancing activity took off after Nov. 25, when the Federal Reserve announced it would buy mortgage-backed securities to help loosen consumer lending. Mortgage rates immediately plummeted well below 6%, breaking a psychological barrier. Refinance applications have soared each week since, though they tapered off around New Year's Day.
Bank of America and other lenders said activity had rebounded to preholiday levels as rates continued to decline. This week, the average for 30-year, fixed-rate mortgages dropped below 5% for the first time since Freddie Mac began keeping records in 1971.
With all the refinancing buzz, Ron Gross of North Bethesda, Md., expected to snag a great rate when he called his lender, CitiMortgage. Instead, he got a recording saying that because of heavy call volume, his call could not be answered. "I couldn't even leave a message."
Susan Cecala of Falls Church, Va., said she, too, could not break through the automated message systems or voice mails. She called two lenders and two mortgage brokers, who act as liaisons between lenders and borrowers.
"Bank of America even sent me something in the mail inviting me to refinance with them, and when I called, they referred me to apply on the Web," she said. "I never did hear from them. Isn't that strange?"
Finally, a friend referred her to a broker who helped her.