A Mortgage Mod Scam in the Making

One of my nice readers submitted the following question in the comments section of my recent post about what a scam the banks’ trial mortgage modifications are. I hadn’t covered the issue of bank-solicited mods in that piece, so I thought this reader’s question and my answer needed to be featured in an actual post for all those people who couldn’t ever imagine their banks blatantly trying to set them up to lose their homes.

Helpme in Jersey writes: “I need help. We just received the packet of information from Wells Fargo for our trial modification. I have until next Friday to make my decision. The payment is something we can afford but I am worried that this is a scam. I want to add that I had not contacted them to see if they would modify our loan. They sent us this paperwork.”

Here’s my answer, something to think long and hard about if you’re in a similar situation:

Be very careful “Helpme in Jersey.” Don’t agree to anything that you don’t have in writing signed by someone from Wells Fargo. And ask lots and lots of questions before you wade into the mortgage mod quagmire, especially if you are current on your mortgage and can afford the payments you have.

Be aware that the banks play a nasty little game where they solicit you for a modification – the wouldn’t it be nice if we just came along and gave you a lower payment come-on – as a way to lure you into their bottomless foreclosure pit.

They start with a perfectly rational-sounding trial modification and instruct you to pay an amount lower than your contracted mortgage payment for three months (or sometimes longer.) What they don’t tell people (or they lie about) is that during those three months they will report you to the credit agencies as delinquent because you aren’t paying the amount your mortgage contract calls for, even though they told you to pay that amount. Oh, and the trial period payments generally ARE NOT applied to your mortgage; they go into some secret account never to be seen again.

Even if you make all the “trial mod” payments on time and jump through any other hoops, such as sending them reams of paperwork one or many times, chances are at the end of the trial period they’ll inform you that for some made-up and usually vague reason that you haven’t qualified for a permanent loan modification. At that time they’ll demand a balloon payment including the unpaid amount from the trial period (yes, even though you paid the amount they told you to pay) and any fees they might have made up to tack on. If you can’t come up with this balloon payment in a relatively short time, you get thrown into foreclosure because you are, at that point, technically three months delinquent on your mortgage.

Now you have to fight off their relentless foreclosure machine, which seems to move forward only, no reverse. Once they have their sights on you, it’s very difficult to get them turned around. And, because your credit has taken a hit, you might not even be able to refinance somewhere else to escape.

I urge you to speak to an experienced housing counselor or foreclosure attorney – someone actually in the trenches – before you make any changes to your mortgage.

Did I miss anything in my advice to Helpme in Jersey? Anyone have any other ideas how to keep this person from falling prey to Wells Fargo?


Single Point of Contact My @SS, Wells Fargo

Back in April 2011 the Office of the Comptroller of the Currency took to task several banks, including Wells Fargo, forunsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing.”

The OCC’s  “enforcement action” required the banks to “make significant improvements in practices for residential mortgage loan servicing and foreclosure processing, including communications with borrowers and dual-tracking, which occurs when servicers continue to pursue foreclosure during the loan modification process.”

One of the improvements specified was providing a single person or “point of contact” to guide borrowers through the loan modification and foreclosure processes instead of making people talk to a different person from the customer service phone queue every time they called in.

That’s something Wells Fargo executives had been telling Congress they are doing fore at least a year before the OCC brought it up.

Unfortunately, Wells Fargo Home Mortgage President Mike Heid and his compatriots seem to have lied to Congress and thumbed their noses at the OCC on this issue.

How do I know? Because I’ve recently been assigned my 17th “single” point of contact at Wells Fargo.  Clearly someone high up in the company really doesn’t understand the meaning of the word “single.” Not so hot on “contact” either, as I never had any actual contact with number 17, Susan Young from the WFHM Office of Executive Complaints (formerly known as the Office of the President.)

You see, Ms. Young left me a phone message on Friday, June 1, 2012, telling me she was responding to some correspondence I had sent to Wells Fargo CEO John Stumpf. (More about that later.) She left a phone number and extension and asked me to call her back. Which I did on Monday, June 4; Tuesday, June 5; Wednesday, June 6; Friday, June 7; Monday, June 11 (twice); Tuesday, June 12; Thursday, June 14; Friday, June 16 and Tuesday, June 19.

Over that 19-day period I had no phone conversations with Ms. Young nor did she leave me any more messages. I did get a letter dated June 4, 2012, telling me she was “the specialist who will be your single point of contact while you are working with our office.”

In that same letter, she referenced having called me that same day. And in a later letter she referenced yet another call she supposedly made. She might well have called, but as she neither reached me nor left a message, I have no way of knowing that.

Finally, on June 19, I gave up trying to reach my very own special contact person and just called the Office of Executive Complaints without dialing Ms. Young’s extension. I talked with a very helpful woman who told me, among other things, that Ms. Young had closed my case on June 14, 2012, listing her inability to contact me as the reason. As if she had been trying and trying and I just wouldn’t call her back, right? Wrong. She me left one message; I left her 10 messages over 19 days. Who was trying hard to get in touch with whom?

So, after 10 unanswered phone calls, I take exception to the word “contact.” And after having endured 17 primary contact people over 27 months, I reserve the right to scoff at “single,” as well. Wells Fargo is flat out lying to Congress, to the media and to borrowers when executives say they provide a single employee to help people seeking honest loan modifications and those on the foreclosure assembly line.

Stop lying, Wells Fargo.

Yes, Trial Mods and Forbearances are Part of Wells Fargo’s Scam

Special Forbearance plans and Trial Modifications are just Wells Fargo’s stalling tactics, requiring loan mod. applicants to pay in money that generally isn’t applied to your mortgage to somehow pre-qualify to be re-reviewed for a loan modification. This is just a load of BS. If you are offered a “special forbearance,” that doesn’t get you any closer to a loan mod. Even if you make all the agreed-upon payments on time, you’ll still be asked to keep sending paperwork over and over. You’ll be reported to credit agencies as delinquent on your loan during the forbearance and/or trial mod. period – even though you are making the payment Wells Fargo specifies. Your loan will likely also still be progressing on the track toward foreclosure (the deadly dual-track system.)                          Read more

Granny vs. Wells Fargo – This series of videos documenting a conversation between two women seeking a loan mod and an employee of Wells Fargo’s Office of the President will sound familiar to anyone who has been playing the delay-and-deny game with any of the big banks. Can you count the lies the WF rep. tells?