Is Wells Fargo evil? ...and credit questions

[ShorterSN]

We have a 20-year 7.125% home loan with Wells Fargo (about 18 years, $99,850 remaining... $1024 per month!). Filed for Ch7 BK in March to ease other debts, trying to save the house. Lawyer wisely insisted we include the house, but keep paying if we wished to keep it, which we did.

Called Wells Fargo a month ago, looking for assistance; they said the only programs they offered were for those behind in payments, either to roll the missed payments into the existing loan, or forgive one or two. Not helpful since we never got behind... it's a bad thing to be responsible now?

Finally admitted defeat now one week from being discharged; we just can't keep the house with these ridiculous payments. Tried to sell it, but couldn't. Market's dead, and home's not FHA approved. Looking like we will have to just walk away, though we've stayed current (so far) on all payments.

Did some research online and found Obama's http://makinghomeaffordable.gov . Turns out we DO have a Fannie Mae loan, and qualify in every other way on that site. So I called Wells Fargo back, and specifically asked about the Home Affordable Refinance application process. In less than twenty seconds, he said I don't qualify. Why?

Because we pay mortgage insurance.

Yeah. Seriously. That was the reason he gave, I verified it twice. Does this make sense to anyone? We pay more per month, so qualify less? Whom do I check with to verify this? It sounds really odd.


So with keeping the house no longer an option, which is best (or least bad) for our future credit reports, and how (or will) it show up differently?:

1. turning the house back over to the bank through the Ch7 BK (I assume we'll call them and arrange it)

2. doing a short sale (several eager Realtors want to handle this for us since I went to a webuyhouses website)

3. foreclosure (simply not paying for a while and saving money to leave... sounds risky to me, but some have recommended it)


Thanks for all your input!

[willbfree]

Do you have enough equity in the house to switch it so you no longer allow them to collect your insurance and taxes? Also did you talk to the folks in the bk dept at WF NOT the usual loan reps? That bk dept phone number is on your bk creditor matrix on the bk petition.

[ShorterSN]

willbfree: I have no idea... it was appraised at $117k two years ago. Since then, I believe the property taxes have gone up, but I really have no idea of the value of the place now, what with this economy. I also don't know how much equity it takes to stop paying it.

I just got off the phone with WF's default department. They told me that I should wait the week until discharge, then I can talk with the BK department, and they will review my options. Until it's discharged, I have to send paperwork to someone else, and the wait time is 60 to 90 days. So I guess I'm waiting a week to find out anything more...

[willbfree]

Usually 20% of the purchase price paid off is what will allow you to stop being required for them to collect your taxes and mortgage insurance.

Let me know how it goes when you do talk to WF. I talked to the bk dept at WF when we first filed our bk petition. I wanted to do a loan refi and combine both our primary and secondary mortgages into one loan but WF said no. Takes two years post Ch 7 before WF will refi a mortgage. The WF guy was willing and offered to do a loan mod and lower our overall payment but that wasn't the idea. That's why I suggested you talk to the bk dept on the credit matrix. They seemed genuinely willing to try to work something out. Considering it's WF I was impressed with the rep I talked to.

[ShorterSN]

willbfree: We're definitely not 20% paid off. Just seems weird that mortgage insurance would stop us from qualifying. Everything I can find on the web indicates otherwise.

I'll keep you informed as this progresses. My impression of WF hasn't been encouraging. They don't appear very willing to work with anyone. While others describe their mortgage companies offering lower monthly payments, sometimes by hundreds of dollars, WF seems like they'd rather have all their homes go into foreclosure. We only have one mortgage, though, so we'll see how it turns out. You'd think that a 7.125% / 20 year has a lot of wiggle room for improvement; our current balance at 5.5% / 30 years would be about $567 per month, not that I expect something that nice.

One bit of humor: the WF rep magnanimously offered that after our Ch7 is discharged, we can still pay off the entire mortgage balance and own the home! I politely informed her that if I had $100k handy, I wouldn't have declared bankruptcy...

[Trixie007]

#3 is the best option to do after your BK, assuming they won't work with you in a satisfactory manner. If you included the house in the BK, the foreclosure won't show on your credit report except as IIB - and they still have to go through the process so you can save money.

[ShorterSN]

#3 is the best option to do after your BK, assuming they won't work with you in a satisfactory manner. If you included the house in the BK, the foreclosure won't show on your credit report except as IIB - and they still have to go through the process so you can save money.

Thank you for that info!

I guess I'm just terrified that since the house was included in the BK, not paying will immediately make an army of lawyers, policemen, and perhaps the army force us out at gunpoint whilst changing the locks, so we loose all our possessions as well as the house

...all right, I'm exaggerating, but staying without paying IS scary to me.

[browneyes]

Sounds like an internal policy. The mortgage insurance covers them if you default on the loan; modifying or refinancing it probably would jeopardize their coverage because you would have to probably qualify for another mortgage insurance policy.

Seems like they will only work with the borrowers if it's in their best interest, and since the mortgage insurance will pay your loan if you default, then they are home free.

Nice, huh?

[TEW]

We have a 20-year 7.125% home loan with Wells Fargo (about 18 years, $99,850 remaining... $1024 per month!). Filed for Ch7 BK in March to ease other debts, trying to save the house. Lawyer wisely insisted we include the house, but keep paying if we wished to keep it, which we did.

Called Wells Fargo a month ago, looking for assistance; they said the only programs they offered were for those behind in payments, either to roll the missed payments into the existing loan, or forgive one or two. Not helpful since we never got behind... it's a bad thing to be responsible now?

Finally admitted defeat now one week from being discharged; we just can't keep the house with these ridiculous payments. Tried to sell it, but couldn't. Market's dead, and home's not FHA approved. Looking like we will have to just walk away, though we've stayed current (so far) on all payments.

Did some research online and found Obama's http://makinghomeaffordable.gov . Turns out we DO have a Fannie Mae loan, and qualify in every other way on that site. So I called Wells Fargo back, and specifically asked about the Home Affordable Refinance application process. In less than twenty seconds, he said I don't qualify. Why?

Because we pay mortgage insurance.

Yeah. Seriously. That was the reason he gave, I verified it twice. Does this make sense to anyone? We pay more per month, so qualify less? Whom do I check with to verify this? It sounds really odd.


So with keeping the house no longer an option, which is best (or least bad) for our future credit reports, and how (or will) it show up differently?:

1. turning the house back over to the bank through the Ch7 BK (I assume we'll call them and arrange it)

2. doing a short sale (several eager Realtors want to handle this for us since I went to a webuyhouses website)

3. foreclosure (simply not paying for a while and saving money to leave... sounds risky to me, but some have recommended it)


Thanks for all your input!

Do bother doing anything don't try to short sell it. stop paying and live there free as long as they will let you. Save your money to find somewhere to live when the time comes.
Your lawyer did not do anything wisely in a chapter 7 no asset case ALL debt is included no if ans or buts.
Depending on your state you can stay there for a while before you have to leave.

[Rick9972]

Sounds like an internal policy. The mortgage insurance covers them if you default on the loan; modifying or refinancing it probably would jeopardize their coverage because you would have to probably qualify for another mortgage insurance policy.

Seems like they will only work with the borrowers if it's in their best interest, and since the mortgage insurance will pay your loan if you default, then they are home free.

Nice, huh?

What most people forget is that your bank does not own the mortgage any more. Wells Fargo is just the servicer and as the servicer they really hope you do not pay on time or even better for them get foreclosed.

As the servicer they get paid a set amount for each payment that they receive. However they get to keep all the "fees" that are added for late payments, etc. A foreclosure removes their obligation to "service" the loan and they actually get more money in fees charged and collected from both the borrowers and the actual owners in a foreclosure (with less work) than they would have earned over 30 years of collecting the payment.

So it is actually very comical to hear the government and banks discuss how the banks want people to stay in their homes.

[Justpoor]

Wells Fargo is evil. I qualified for the Obama plan and did not have mortgage insurance. They declined me.

[LuciluS]

Call Your US Senators & Congressmen....I'm serious. There is an article in the Bankruptcy & Credit News Section of this Forum.

If you do not know their names. Google your town, state & add US Senator or US Congressman on the end. Most of them have websites where you can either insert a letter or email them and a phone number to call them.

It's probably wise to quit paying the mortgage. You have a long time before foreclosure and the auction/sale of home. Also, it's ironic, the pattern on receiving any help with a Mortgage is those who have behind in their monthly mortgage! How Sad!

[OregonMom]

Actually the making home affordable plan isn't really working either. I read about a month ago in the paper that it was designed to help some 400,000 people and so far it has helped 50!! The banks are under no obligation to help you. My MIL has been drug around for as long as the plan was available and her mortage keeps telling her the paper work is going to be another couple of weeks. So I wouldn't count on anyone helping. Can you convert to a 30 year just to make the payments smaller for now?

[ShorterSN]

It really irritates me that this program was implemented for people just like us, but is in actuality helping no one. I mean, we've been through job losses, had a 24wk preemie, declared bankruptcy, lost our car, and somehow never missed a single $1000+ monthly payment. Instead of just walking away, I'm still trying to figure out a way to make this work... wouldn't we be prime candidates for this program? But no. In fact, we're even more at a disadvantage because we HAVE been keeping up

OregonMom: They won't discuss modifying the loan in any way. Perhaps once the BK has been discharged in a way week, they will- then I can talk to a different department. I'll have to wait and see.

[Dewey]

I have a friend who's been trying to do this Obama loan modification since January! The bank keeps jerking her around with "but you did file this, you didn't file that" when she did. She has to keep re-sending them stuff. It's a scam.