Caruso-Cabrera: How I Qualified for a MHA Refi

Mine is a story of government intervention gone wrong, of well-meaning intentions unfulfilled.

Michelle Caruso-Cabrera
CNBC Anchor

You see, I qualified for President Obama's Making Home Affordable Program. You should find that absurd.

A few months back interest rates were at record lows and I decided to refinance my fixed rate mortgage. I called Bank of America , my loan servicer, and after a couple of questions the nice guy who answered the phone told me I qualified for the new government program.

"That can't be possible," I said. "That program is for people in dire straits. It is meant to help people in trouble. I'm just trying to do a basic refi."

He told me that yes, I absolutely qualified and directed me to the program's Web site.

To get an MHA refi I had to be:

1. Employed

2. Current on my mortgage

3. In a loan currently owned by Fannie Mae or Freddie Mac

4. In a loan that didn't exceed 105 percent of the value of my home

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If I went with the program what did I get? Speed. The bank did no income verification and no appraisal. Instead the nice man on the phone just typed my address into a government database that told him the approximate value of my home.

The refi was done in a lightning-quick three weeks.

I comparison shop and I got the same rate that everyone else was offering: 4.8 percent down from my then-rate of 6.7 percent.

Closing costs appeared to be the same regardless of the company.

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To its credit, the White House has acknowledged the program isn't working. That's because the worst of the subprime mortgages are on homes that have fallen so far in value that a loan-to-value ratio of 105 percent or even the more generous level of 125 percent is a pipe dream.

Here's the bottom line: This was supposed to be helping people in need.

When banks or politicians start bragging about "all the people who have been kept in their homes," be suspicious.

© 2012 CNBC.com