[mbanks21]

Not sure what to do here. We bought a new house in July of this year and took out a $300k mortgage and told the loan person when we sell our old house we want to put $200k towards the loan and modify it (they call it recast I guess) and then pay the lower monthly payment on just $100k (always good to have revolving credit). They said no problem of course. Fast forward, we call them to do the loan modification, they say ok we'll take $200k from your checking and we'll submit the paperwork. Keep in mind at this point we've talked to at least half a dozen different PNC reps who all said "no problem".

We get a letter in the mail yesterday saying "sorry your lender does not offer loan modifications". Basically tough $hit, have a good day. We feel like we were lied to so they could get our loan. I mean, we WERE lied to, by numerous people. We have emails back and forth and of course all the calls are recorded. I've already submitted a complaint with BBB, SEC, and the state comptroller who apparently handles complaints for PNC. Anyone ever have something like this happen to them? And of course if we want to say F you and take our loan elsewhere, interest rates have gone up like 2% since we locked in our rate ~4 months ago.

Also to add both the wife and I opened checking accounts at PNC for this purpose, as well as a minor account for my daughter.

[zx10guy]

Unfortunately, anything verbal doesn't mean $hit. You have to have it in writing. If your loan docs don't spell out the ability to do what you're looking for, you have no leg to stand on.

I've been a PNC customer for years. I left M&T because they wouldn't waive a $25 certified check fee after decades of banking with them. There's more details but that's the gist of it. So I went to PNC. I don't know the size of your banking with them, but they have a private client group. I'm in this group and have a specific rep that I deal with on all banking matters...good and bad. While in general, I've been happy with my experience with PNC, there has been some issues. One of them was recently when I refi'd my home. I have a HELOC with them and they were holding things up with erroneous and ever changing requirements to subordinate under the new primary mortgage company. I raised heck with my rep and magically, they agreed to go along with the primary mortgage company in accepting the online appraisal versus having a full blown one done. Mind you, the total lien on the house is well below the point where I have more than 20% equity in the home....it is actually 40% equity I have.

When I took out the HELOC with PNC, I went through all the paper work to ensure I was getting exactly what they were promising. Yes, I read through all the paperwork.

Unfortunately, it's a lessons learned thing for you at this point.

[aktif8]

Looks like pnc does some form of private securitization and doesn't keep mortgages on their books. In this case, they would have to ask the end investor for permission to do the recast, and it looks like the end investor said no. While they weren't necessarily lying up front, they didn't tell you the whole truth, which is that it's theoretically possible, but highly unlikely.

A few options:

Evaluate buying the rate down with points and refi with the cash down, with any bank that has the best rate.

Evaluate the real world power within your risk tolerance for returns on that 200k invested, bearing in mind the income tax deduction for the interest you're paying at present. Yes, it lowers your payment, but that 200k is dead capital.

Also look at a shorter term, which may make up the rate difference to a large degree.

I'm not an FA, just used to be in the mortgage space, but you may be best served by talking to an FA - make sure they're a fiduciary.

[Tyga11]

How can a loan be modified since rates are changing? Why would they have agreed to do this?

[aktif8]

Originally Posted by Tyga11

How can a loan be modified since rates are changing? Why would they have agreed to do this?

It's not a modification, just a recast, and not that uncommon

[Tyga11]

Originally Posted by aktif8

It's not a modification, just a recast, and not that uncommon

So what is going on with OP's situation and why aren't they honoring it?

[vreihen16]

Two words...credit union.....

[mbanks21]

Thanks guys. We have many emails from multiple PNC employees saying this can be done, not one of them said "may be done". I feel like they only said this to get our business from the start. As mentioned above, PNC does not keep these loans, they sell them to the highest bidder which was some place called Blue Foundry Banking or some shit like that. I'm waiting for a call back still but we're super pissed. Yes we could easily take our loan elsewhere but it's still a major hassle and more paperwork to fill out.


And yes I'm sure we could easily take the $200k and invest it and pay the mortgage that way but I'd have to convince the Mrs.

[mbanks21]

Someone from PNC called based on my BBB complaint, she asked me to send her all the emails and she was able to locate 6 to 7 phone calls she said she would review. I even told her how they charged us $250 for the recast fee and quoted us the new lower figure, she said if they weren't going to do it they definitely wouldnt have even mentioned the fee, so we'll see what happens. Thanks for everyone's input so far

[RickFLM4]

What do you mean by "(always good to have revolving credit)"? I would think that once you made that paydown, the mortgage is paid down (recast or not) and the money is gone.

You should be able to refi to a lower rate in a couple of years after the recession.

[billnchristy]

How about slowly feeding 50-100k in extra principle over the next couple years and then refi when things recover with the remaining. If you play it right that 100k could be significantly more though I would be wary of calling any investment safe at this point.

You'll eat the extra interest until things clear up but you'll be in a better place and will have paid off several years worth.

[RickFLM4]

Originally Posted by billnchristy

How about slowly feeding 50-100k in extra principle over the next couple years and then refi when things recover with the remaining. If you play it right that 100k could be significantly more though I would be wary of calling any investment safe at this point.

You'll eat the extra interest until things clear up but you'll be in a better place and will have paid off several years worth.

2-year treasury yields or FDIC insured short-term CDs probably passing the mortgage rate depending on when OP got into the mortgage.

[Our03z4]

Originally Posted by aktif8

Looks like pnc does some form of private securitization and doesn't keep mortgages on their books. In this case, they would have to ask the end investor for permission to do the recast, and it looks like the end investor said no. While they weren't necessarily lying up front, they didn't tell you the whole truth, which is that it's theoretically possible, but highly unlikely.

A few options:

Evaluate buying the rate down with points and refi with the cash down, with any bank that has the best rate.

Evaluate the real world power within your risk tolerance for returns on that 200k invested, bearing in mind the income tax deduction for the interest you're paying at present. Yes, it lowers your payment, but that 200k is dead capital.


Also look at a shorter term, which may make up the rate difference to a large degree.

I'm not an FA, just used to be in the mortgage space, but you may be best served by talking to an FA - make sure they're a fiduciary.

1st thing I thought of when reading the OP post. No way with inflation being high does it make sense to pay it down. I'm sure the OP still got a great interest rate at that time. Heck some of the high yield accounts are even moving back up. My regular checking is giving 2% right now.
Good post!

[mbanks21]

Originally Posted by RickFLM4

What do you mean by "(always good to have revolving credit)"? I would think that once you made that paydown, the mortgage is paid down (recast or not) and the money is gone.

You should be able to refi to a lower rate in a couple of years after the recession.

Having a line of credit open that you are consistently paying on time helps your credit. I'm sure it's a wash with not having any mortgage payment at all but that's where we're at.

Originally Posted by billnchristy

How about slowly feeding 50-100k in extra principle over the next couple years and then refi when things recover with the remaining. If you play it right that 100k could be significantly more though I would be wary of calling any investment safe at this point.

You'll eat the extra interest until things clear up but you'll be in a better place and will have paid off several years worth.

We're looking at all our options. Just sucks paying $16xx a month vs $6xx a month because multiple people at the bank told you you can do something you can't.

Trust me if it was just me making decisions I'd have yolo'd $100k into some stocks but I have to appease the wifey.

[mbanks21]

2 year treasury yield at 4.1%. Also should probably look into I-Bonds although they have $10k limits per year. We could do $20k this year and $20k in 3 months

[F32Fleet]

PNC will allow a "recast" but the caveat is that only some loans qualify for it.

They do not mention which loans and the qualifications..

The one thing I did find is that the investor must approve it.

[mbanks21]

Originally Posted by F32Fleet

PNC will allow a "recast" but the caveat is that only some loans qualify for it.

They do not mention which loans and the qualifications..

The one thing I did find is that the investor must approve it.

This is why we're so upset, they never told us any of this. Everything was "yes you can" "absolutely" "sure can!" and if they knew we wanted to recast from the start they should have worked with a lender that allowed it.

[tdott]

You need to read the terms and conditions of any mortgage or contract you sign carefully. Don't rely on what some person trying to get their commission told you.

[mbanks21]

Originally Posted by tdott

You need to read the terms and conditions of any mortgage or contract you sign carefully. Don't rely on what some person trying to get their commission told you.

Obligatory "nobody reads those" however recasting is possible and allowed PNC still needs to make this right. I'll keep you guys updated as I'm sure you're all enthralled

Also it wasn't just the "sales" guy. After they had our mortgage numerous people including supervisors and whatever they call their "resolution/escalation" team all said it was possible and sent us paperwork to do it and gladly took our $200k principal payment.

[billnchristy]

Originally Posted by mbanks21

Obligatory "nobody reads those" however recasting is possible and allowed PNC still needs to make this right. I'll keep you guys updated as I'm sure you're all enthralled

Also it wasn't just the "sales" guy. After they had our mortgage numerous people including supervisors and whatever they call their "resolution/escalation" team all said it was possible and sent us paperwork to do it and gladly took our $200k principal payment.

I have been having a hard time sleeping.

[tdott]

Originally Posted by mbanks21

Obligatory "nobody reads those" however recasting is possible and allowed PNC still needs to make this right. I'll keep you guys updated as I'm sure you're all enthralled

Also it wasn't just the "sales" guy. After they had our mortgage numerous people including supervisors and whatever they call their "resolution/escalation" team all said it was possible and sent us paperwork to do it and gladly took our $200k principal payment.

While many don't, some do, maybe not every word.

But I was concerned about pre-payments and early pay off fees or terms against either of those, so I made sure I read those sections carefully.

If you were considered about recasting, perhaps you should have read that section, or ask questions, have it pointed out where what they said was written or explained to you, or have a lawyer review it.

Looks like they didn't understand what you were asking them to do, or you didn't use the right terms when asking for it. The pre-payment is allowed and of course they took it, but you can do a pre-payment without a recasting. Perhaps they thought you were asking to change the interest rate or other terms of the mortgage also. If you knew in the mortgage contract the "recasting" was allowed and that was what you wanted to do, you could have pointed it out and avoided the confusion.

Looks like they have a recasting fee which is normal, not sure if you were expecting it done for free or what the issue is now. But looks like you are getting it sorted out.


Just saying in the future, "nobody reads those" is not a great defense.

[F32Fleet]

Originally Posted by mbanks21

This is why we're so upset, they never told us any of this. Everything was "yes you can" "absolutely" "sure can!" and if they knew we wanted to recast from the start they should have worked with a lender that allowed it.

My guess is that the LO was none the wiser with regards to the conditions other than they allowed it.

PNC probably make it right.