Wells Fargo “$2B” Settlement – Just some more PR Folks….

3 Jan

Wells Fargo Lender FraudIf you have been reading the news you may have noticed that on December 20th the California Attorney General’s office announced a settlement with Wells Fargo that “COULD” be worth $2 billion to Californians with adjustable rate mortgages.
I am afraid I did not do more than glance over the entire 27 page settlement, which you can find here if you are so inclined, however seeing as I am no attorney thats probably a good thing.  Ron Ballard, “the California Short Sale Lawyer” is just the man to parse through this document and tell us the truth of the matter.  For his full write up visit his site HERE.

“The Assurance is signed by WFB but the signature for the California Attorney General (AG) is merely “Approved As To Form and Content.” Wells Fargo is simply “assuring” to the State of California that it will follow the terms of the document – probably just like it has told thousands of borrowers that it won’t foreclose their homes during the loan modification or short sale applications yet does so anyway.
Well I feel better…..  It’s certainly nice of Wells Fargo to PROMISE that they will actually go through with the terms and modify the these loans.  It kind of reminds me of another bank doing exactly what it wants when it wants….
“Article IX (page 17) of the Assurance provides $32,000,000 to “be distributed to borrowers who experienced a foreclosure sale on a property secured by an Eligible Mortgage between January 1, 2005 and the Effective Date (presumably December 16, 2010). If you’re a borrower with an Eligible Mortgage and you get foreclosed after December 16 and before you get an “assured” loan modification, you’re apparently out of luck. This is estimated to benefit more than 12,000 pick-a-pay borrowers who lost their homes to foreclosure. My arithmetic says this will average less than $2,666.66 per borrower. I guess that’s better than nothing now that they likely are renters.”
I guess this is why all the big banks continue to make record profits even during the Great Recession that all the rest of us are going through.
Ron goes on to actually do the math and try to figure out what this “Assurance” means to a borrower with an eligilble mortgage.  Keep in mind this only affects borrowers who used a “pick a payment” mortgage that was originated by or was acquired by Wachovia or World Savings Bank.

“The AG’s news release says the “total value of modifications mandated by the settlement is projected to be more than $2 billion.” Again, this is political “news-speak.” The Assurance does not state this number, nor does anything state the basis for the calculation of this amount. As you will read below, this could be an entirely fabricated amount.

It certainly doesn’t mean that there will be anything like $2 billion in principal reductions.

Since modifications can be stretched up to 480 months, this could be less than $50 million per year in calculated “value.” The news release estimates that 14,900 borrowers could be offered these “affordable loan modifications.” Divide that into $50 million and my arithmetic shows an estimated annual savings of $3,356, or about $280 per month. Keep in mind that much of this “value” is likely never realized if the borrower sells the property .”

Again, this is assurance really seems to be nothing more then a giant PR move by Wells Fargo.  What worries me about this is that Joe Homeowner will see the headline….. “Wells Fargo Reaches $2 Billion Settlement with California Homeowners”….. and they will think that if they can just hang on a little longer they will be able to save their home.  As much as I wish this were true it just is not the case.  Too many homeowners are promised by their bank, “Absolutely, we will modify your loan”, only to end up in limbo paying their trial loan mod payment only to have the rug pulled out from under them when the bank denies their permanent loan mod and then forecloses 6 days later, I have seen this happen time and time again.

Why do they do that?  I’ll tell you why….  they figure they will get x number of more payments our of a borrower while collecting all the financial information they want so the can decide how they can squeeze the most money possible out of the borrower.

OK rant done.

If you are thinking of doing or even in the middle of doing a loan modification and want to know what chance you have of being approved give me a call, 916-585-3636, or email me peter@peterparkerteam.com.  I have access to a tool, very similar to what the banks use when deciding if a loan mod will make them more money, that can save you time and frustration when it comes to the “unknown” of the loan modification process.

I am here to help.

Peter Parker
Keller Williams Realty
Direct Phone – 916.585.3636
Short Sale Genius – Elite Level
N.A.R. Certified Short Sales and Foreclosure Resource
Fax – 916.241.8022
CAR DRE License # 01257844

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