Feedback: The Myth of Refis

I wanted to respond to your origination strategies article ("Home Lenders Face a Smaller, Purchase-Driven Market," Jan. 4). One big fallacy that has become more real every day is the statement that refinancings are cheaper than purchase originations to produce. The reality is the following:

• The pull through rate is closer to 60% on refis, versus 85% on purchases, affecting hedge costs and processing costs.
• The purchase business has motivated parties on all sides, including realtors, who are paid to bring the deal to term. Refi borrowers have no sense of immediacy and feel put out by the whole process.
• Appraised value kills or restructures most of the deals on refis but miraculously is not an issue on purchases. Somehow the independent appraisers come in at the price.
• Many refi deals have second liens that lead to twice the work and can take up to 90 days to complete.
• Many refi customers change their mind during the process about loan size or program as they feel they have the luxury to make up their mind. With purchases, borrowers are quick to decide and move on to other decisions.

There are other nuances but refis are more a curse than ever as the unpredictable waves make staffing impossible and service levels unacceptable.