Refinancing waves sparked by falling interest rates have long been a mixed blessing for all involved. The consumer lowers his/her monthly payment, but often pays fees and signs mounds of paperwork. Banks reap profits from originating the new loans, and their salespeople rake in commissions. But banks and mortgage servicers also lose customers in a refi wave. And the investors in mortgage-backed securities get their principal back sooner than expected, and must redeploy it in a lower-rate environment.
A product recently rolled out by Mortgage Harmony Corp. of Vienna, Va., tries to realign the interests of these various parties.