Chase Rate Reduction Program - Scam? (Ping Flasch)

[Kodos]

We are 2 & 1/2 years into our mortgage with Chase. It's a 30-year fixed rate of 6.125. Our payments are always on time, and we always pay extra toward the principle.

Out of the blue, a Fedex arrived from Chase offering us a 30-year fixed rate of 5.13 as part of the Chase Rate Reduction Program. Obviously, something coming out of the blue like this sets off the scam alarms. (This is actually the second time they have sent us an offer like this - I shredded the first one.) One thing I noticed it that the amount they say is our current balance is $1,000 over the actual current balance. We owe just over $228, they say $229. Not sure if they just ballparked it and the actual loan would exactly match our current balance or not. Also, it'd be a 30-year loan, so we'd be back to square one in that aspect.

Here's links to a couple other threads I found about these offers.

"Chase Mortgage Rate Reduction Program" for good ... - Zillow Real Estate Advice

Chase Mortgage Rate Reduction Program kinda rocks!

"chase rate reduction program" scam? - Mortgage Forum - LoanSafe.org

The rate is locked at 5.13, no appraisal is needed, and all fees are waived. There is a deadline to reply by to get the rate (the presence of a deadline also sets off alarms for me).

Here's the fine print (copied from one of the linked threads):

We believe you are eligible for this special program based on information available at the time this mailing was prepared. Eligibility is subject to a few basic items:

1. You must respond on or before the expiration date 6/2/2010 and provide certain information we will request.
2. This program is conditioned on verification that:

* you are employed and/or have a steady source of income along with sufficient assets to close on your new loan
* you do not currently have a second lien mortgage held by a company other than Chase (other options are available if you have a second lien mortgage at another financial institution - call us for details)
* you have no bankruptcy, forclosure, judgements or liens
* you are currently occupying the property as your primary residence
* borrowers on the new loan should remain the same as the orginal loan (some changes in borrowers are allowed with the new mortgage, call if you have questions)
* your property is a detached single-family residence (other options are available for co-ops and condos - call us for details)
* your property is not held in trust
* you current mortgage loan does not have mortgage insurance
* there is a net benefit to you such as reduced principal and interest payment, a lower rate, or converting to a more stable product (such as moving from an adjustable rate to a fixed rate)
* you will sign the required closing documents

3. This offer is not transferable to another property or person.

*No Closing Costs: The customer is not reponsible to pay any bank fees which means no application, processing, appraisal, credit report or origination fees. Third party costs associated with closing the loan are also waived. Interim interest and any tax or insurance escrow shortages must be paid by you.

*The amount you save on a refinanced mortgage may vary by loan. Since a refinanced mortgage may have a longer term than your current loan, you may not realize savings over the entire term of your new loan.

The No Closing Costs covers the origination fee, appraisal fee, title insurance, attorney fees, settlement or closing fee, notary fee, flood determination fee, courier/overnight delivery fee, abstract or title search, recording fee, city/county tax/stamps.

Basically, I am very suspicious of anything like this that just shows up unsolicited and has a one-week limit. My wife and her mother seem to think it is a good deal. Figured Flasch would have good input.

[bbor]

Sounds like they are adding 2.5 years of amortization onto your mortgage.If you are 2.5 years in on a 30 year already and they want to re up you for another full 30 years.

[Passacaglia]

Originally Posted by bbor

Sounds like they are adding 2.5 years of amortization onto your mortgage.If you are 2.5 years in on a 30 year already and they want to re up you for another full 30 years.

If that's the case, make sure there's no pre-payment penalty (and get it in writing, if it's a big deal to you).

[cubboyroy1826]

The rate is pretty high compared to what the going rate is right now. I am in Illinois and right now we are refinancing clients at 4.625% with no closing costs. With where your rate is right now I would think you could look at a 25 year loan and possibly keep your payment the same or even lower it.

[Greyroofoo]

If the e-mail didn't come from Chase it's likely a scam.
If it is indeed coming from Chase then it's most likely a bigger scam.

[Swaggs]

Yeah -- I would consider seeing if you can look at a 20 or 25-year loan.

I'd also shop around, as that rate doesn't sound too great by today's standards.

[Flasch186]

I actually was in this very same situation and was just as skeptical so I called them and spent hours pounding on them to tell me the catch. They kept repeating that there wasnt one, that basically with a person who is a good bet (credit, income, etc.) they can mod you, "For free", spreading your loan out (again) and collecting a small check from the government for the mod (in some cases). Once it was all said and done, with a coincidental change in taxes escrowed my payment didnt drop much AND had I known rates were going to drop another entire point I wouldve not done it but since it was free and there seemed to be no catch I said, go ahead. So yeah, there may not be a catch but I still recommend doing it all over the phone. Plus, as stated above by refinancing somewhere else you might get a better rate (maybe with some closing costs - and then you have to figure out break evens, is it worth it, etc.) rates vary nationally.

.....and send people to roundtablerealty.com

[Ajaxab]

Back in December, my wife and I got one of those refinancing letters in the mail. Like you, we had only been in our house two and a half years. The deal did seem to be too good to be true and I couldn't understand what would motivate the bank to go through with the deal. But after doing some digging and contacting a mortgage broker, we ended up refinancing from a fixed 30 year 6.25 to a fixed 15 year 4.375 and our monthly payment only increased marginally ($50 a month or so for our pretty modest mortgage). We're happy to be saving thousands of dollars on interest over the next decade and paying off the principal twice as fast.