This is admittedly one data point, but one has to assume that Citi is making similar calls to others similarly situated. From a reader:
I had an interesting conversation yesterday with a neighbor of mine. He said that he and his wife received a call from Citibank offering to refinance their mortgage at a lower rate. What’s interesting about that is that (1) he and his wife are and always have been current on their 6.75% thirty year fixed mortgage (indeed, they make extra payments regularly to reduce principal); (2) their house value is still above the mortgage — i.e. they are not upside down; and, (3) they don’t understand why Citibank would offer them refi at closer to 5% given Citi’s financial condition (and, by the way, the fees for doing the refi are minimal). So, the question is, why is Citi doing this? Any ideas?:
The only thing I can think of is that Citi is under pressure to show the government that it is doing refis. Or perhaps there are more attractive (to Citi) other terms in the new mortgage, but I can’t imagine they’d be enough to make up for the large rate differential. Or perhaps Citi recognizes they may refi given the rate differential and is calling pre-emptively to make sure if this couple does refinance, that Citi is at least in the running to get the refi. But theories two and three strike me as a stretch.