Good old Wells Fargo is up to their tricks again. Only this time, they may be playing with fire.
If you haven’t already heard, Wells Fargo instituted a policy that went into effect on 5/1/12. From now on, they are refusing to waive any deficiency rights for their Freddie Mac short sales. This, despite the fact that Freddie just instituted a policy on 2/15/12, specifically barring any lender/servicer from requiring deficiency language in their short sale approval letters. The new policy reads “Reinforcing the requirement that the Servicer, for itself and on behalf of Freddie Mac, must waive all rights to seek deficiencies for short payoffs and deed-in-lieu of foreclosure transactions on Freddie Mac Mortgages that have closed in accordance with the Guide”.
So, what did Wells Fargo do with this requirement? They basically gave Freddie Mac (and distressed homeowners) the proverbial “middle finger”, and instituted a policy that REQUIRES that ALL Freddie Mac mortgages will have the following language in the approval letters they issue: “With the exception of a Home Affordable Foreclosure Alternative (HAFA) closing, nothing in this Demand Statement or in the release of the mortgage shall waive the right to seek a deficiency under the loan documents or any of its other rights thereunder, and the obligations evidenced by the note shall remain in full force and effect until paid in full“. Houston, we have a problem!
I spoke with a Phoenix short sale agent about this the other day, and she told me that an executive at Wells Fargo told her that this policy was put into effect to “protect Wells Fargo, should Freddie Mac ever decide to change their policies regarding deficiency language in their approval letters”. Really? Do they really think we’re that stupid?
We all know that Wells Fargo and the GSE’s have been after each other, with Fannie/Freddie going tit-for-tat on several issues in the mainstream media, but this one crosses the line. You see, this new “policy” (which is in direct conflict with the wishes of Freddie Mac), not only hurts homeowners, but also the taxpayers that are now funding (and own) GSE’s Fannie Mae and Freddie Mac. Basically, Wells Fargo is going out of their way to force homeowners into foreclosure, especially in those states that offer deficiency protection (such as AZ, which has the AZ Anti-Deficiency Statute). You see, in AZ, short sales are not protected from future deficiency issues (unless specifically stated in the approval letter). In the case of foreclosure, in most cases, homeowners receive this protection. So, if a Phoenix short sale client receives an approval letter with this language in it, they will have no other choice than to allow their home to go to foreclosure. At the end of the day, a homeowner who is trying to “do the right thing”, and not simply walk away from their mortgage, is now getting screwed, big-time!
When all is said and done, Wells Fargo will once again end up with egg on their face from this latest fiasco. Being a banking customer of Wells Fargo with 8-10 different checking/savings accounts with them, I will be moving my business elsewhere this week. Their behavior is egregious, and hopefully others will agree and choose to do business with a different bank.
For those that are interested, I have included copies of the Fannie Mae Policy (2012-5), a copy of a recently obtained Wells Fargo Phoenix short sale approval letter, and correspondence from a Wells Fargo negotiator, specifically stating that “Freddie Mac retains the rights for deficiency” (even though Freddie’s policy specifically instructs servicers to NOT include this language). Simply click on the following link…
Wells Fargo Freddie Mac Short Sale Deficiency
So, now what? I plan on spending a good portion of my day sending this blog post, along with the documentation, to anyone that will listen. This includes our executive level contacts at Wells Fargo, Freddie Mac, the House Financial Services Committee, the local press, etc. Anyone that will listen.
Wells Fargo has made a decision to blatantly disregard Freddie Mac’s policy of not retaining deficiency rights in their short sale approval letters, and make up their own rules. In doing so, they stand to hurt not only distressed homeowners, but the American Taxpayers as well. This “pissing match” between Wells Fargo and Freddie Mac needs to stop, and it needs to stop today!
Please do your part and forward this blog to anyone that can help with this cause.
Until next time…
Google+
Hi,
I posted on the other link here in this blog, but I wanted to reiterate my expereince that there may be hope.
I spent most of yesterday working on an email to freddie mac people as well as the contact at Wells Fargo who sent our agent the info about how the stance is Freddie’s not WF’s.
I also began to confirm email addresses for Wells Fargo higher up executives. I managed to get a phone number and get transferred to a delightful guy in the Wells Fargo Office of Executive Complaints who was very helpful. He spent quite a bit of time talking with his corresponding Short Sale Complaint Dept. When he got back to me, he said that Wells Fargo has received so many concerned issues about this new paragraph in their Short Sale Demand Letters, that they are working on producing a new letter that will be revised and (hopefully) not include the paragraph about seeking the deficiency. With a hope and a prayer, we are waiting to see what Wells Fargo will do tomorrow to change the letter.
I recommend staying on your agents tail to be sure they pursue looking for a revised letter. We are supposed to close shortly on this short sale that has been going on since January. Because of Wells Fargo’s unbelieveable delays and lack of proper training for staff, our credit score has plummetted over the past 10 months. We initially had a offer in September 2011, but lost it because of the exhausting shananigans Wells Fargo put us thru. Now we have been waiting since early January 2012 with a new offer and Wells Fargo is taking even longer to “process” and all the phone calls in the world lead to erroneous info, contradictions, and frustration.
Hopefully, after my contact with a kind guy in Executive Escalations at WF, we may actually see a change as well as light at the end of this exhausting event of a short sale. If there is not change on the verbiage of the Demand letter, we will let the house go into foreclosure as there will be no option left.
Foreclosure is the last thing we ever wanted, but being chased down for a deficiency after enduring a Wells Fargo Short Sale simply will put us out of commission.
Good Luck to you all and our Final Outcome TBD!
In the past few weeks, I have seen examples in Arizona where Wells has re-issued approval letters on HUD- VA and Freddie Mac short sales that did include waiver of deficiency language. If your negotiator refuces to do so, go direct to HUD. Good luck.
Hi Ken,
We’ve seen the same thing as well. Wells Fargo is now waiving deficiency on Freddie Mac loans. Thanks for stopping by.
My fiance and I are on the opposite end. We are trying to buy a short sale, in AZ, for 8 months now. Our first home, too. Such a mess. We are at the point where Wellsfargo is not giving the seller the waiver. The seller has an attorney and we are waiting to see if Wellsfargo will let the seller have it. Otherwise, it will go to foreclosure and we will not be able to buy the house. If that happens, I will pull my accounts from Wells as well. Bob, Do you have the contact names and e-mails for who you contacted, so that I may pass that along to the seller’s realtor? Thank you so much for your help in advance. :0)
Hello Rae,
Feel free to call me, and I’ll see if I can help. Best way to reach me today is at 602-909-5994.