Wells Fargo Mortgage Modification is a Scam

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Bank of America Lied to Homeowners and Rewarded Foreclosures, Former Employees Say
(Hmmm ... I wonder what other banks did this same thing?!)

Liar, Liar Pants on Fire

Below you'll find my account of the "personal lies," the false statements made directly to me by employees of Wells Fargo Home Mortgage all the way from customer service representatives in the phone queue to the Office of the President.

You can read about the "institutional lies" on my page The Words Do Not Match the Deeds. And Freddie Mac, the owner of my mortgage loan, hasn't been exactly a beacon of truth and enlightenment, either.

Seems like both kinds of lies are endemic in the system at this point ... makes you wonder who at the banks even knows what's true.

The Fine Line for Mortgage Loan Modifications
If lenders made it easier for people who were in trouble, but not yet in default, there would probably be more successful loan modifications.

Homeowner Questionnaire Shows Banks Violating Gov’t Program Rules
ProPublica received detailed responses from 373 homeowners -- all of whom applied to get a modification through the administration's foreclosure prevention program -- and they tell a consistent story. Seeking a modification has been an infuriating, stressful nightmare: a black hole of time lost repeatedly calling an 800 number, faxing and mailing the same documents over and over, and coping with the ramifications of errors made by poorly trained bank employees.

1) The Lie:
You didn't send the right paperwork #1
In a letter, dated March 29, 2010, Wells Fargo listed among the documents needed "in order to process your request" a "Hardship Letter." Which I had already sent. The same letter also asked for "3 X Pay Stubs," which the RMA checklist specifies as proof of income for "each borrower who receives a salary or hourly wages." Had the person reviewing my initial packet read the hardship letter I sent, he or she would have seen that I am self-employed.

The Truth:
I didn't know it then, but the very first communication from Wells Fargo started off the now-familiar "send your documents over and over again" game. In my mailing indicating I wished to be considered for the government-sponsored Home Affordable Modification Program (HAMP), I sent the information specified to "Request a Home Affordable Modification." I sent a completed Request for Modification and Affadivit (RMA) form, complete with attached Hardship Affadavit, IRS form 4506T-EZ and my 2009 personal tax return, as specified on the Making Home Affordable proof of income checklist for borrowers who were still current on their mortgages. (More on that topic later).

2) The Lie:
We have been unable to contact you for needed information; therefore, we have canceled the review of options for retention of your home #1
On April 6, 2010, someone at Wells Fargo “removed” my loan modification request from the retention review and moved onto the “short sale” list, making a note that WF had been unable to contact me.

The Truth:
The March 29, 2010 letter (referenced above) asking for additional documents reached me on Friday, April 2. I called for clarification on Monday, April 5, and was given an expanded list of documents needed. I specifically told the customer service representative, who suggested I fax the documents, that I would be sending them by regular mail. I sent them later that same day, Monday, April 5, 2010.

3) The Lie:
You didn't send the right paperwork #2
On April 14, 2010, I received a letter dated April 7, 2010, that purported to provide the “final decision" on my "mortgage loan request," which was that "we are unable to adjust the terms of your mortgage."

"This decision was made because you did not provide us with all of the information needed within the time frame required per your trial modification period workout plan.”

The Truth
I knew right away this letter was bogus because 1) I had provided Wells Fargo with all the information I had ever been requested and 2) I had never been assigned a trial modification period workout plan!

4) The Lie:
Your review is near the end #1
April 27, 2010, I spoke with Wells Fargo customer service representative Kristin, who asked many questions about my expenses and confirmed that the figures I had provided on the previous financial worksheet were “within acceptable range.” She also confirmed that all the necessary documents had been received and were up to date and said the review was nearing the end.

The Truth:
The real truth is I have no idea what Wells Fargo was reviewing during this time period. You see, their servicer agreement with Freddie Mac, the alleged owner of my loan (also known as "the investor") requires that all borowers who request modification be first reviewed for the HAMP modification program. However, that apparently didn't happen in my case because there were two different scenarios presented to me regarding the timeline of my review. In one, the HAMP review began July 8, 2010. In the other, it began April 20 but didn't consider HAMP until June 29, 2010, because (you guessed it!) they didn't have the correct paperwork all that time. I consider them both to be lies. Look at my record of when paperwork was sent.

5) The Lie:
You didn't send the right paperwork #3
I received a letter dated May 7, 2010, that purported to provide the “final decision" on my "mortgage loan request," which was that "we are unable to adjust the terms of your mortgage."

"This decision was made because you did not provide us with all of the information needed within the time frame required per your trial modification period workout plan.”

The Truth
Still bogus because 1) I had provided Wells Fargo with all the information I had ever been requested and 2) I had never been assigned a trial modification period workout plan! I did find out that these nonsense letters may serve to reset the start date of the review process.

6) The Lie:
Your review for the HAMP program is starting #1
On July 8, 2010, Jessica Dahms, who was the first WF employee who said she would be with me through the rest of this process, called to tell me my file had been re-assigned to the government program HAMP. She said I had been pre-qualified for that program. I asked her to explain what were all the programs I was considered for during the previous three-plus months and got no answer.(Remember, back on April 27, I was told my review was nearly complete.)

The Truth:
No idea. Never did get anyone from Wells Fargo to give me a comprehensive list of all the workout options considered for loans - in general or mine specifically. Nor did I ever see any kind of timeline for the review processes.

7) The Lie:
You can't get a mortgage modification because you are still making payments #1
On May 17, 2010, Wells Fargo customer service representative Christian told me that being reviewed for a traditional modification won’t help me because I don’t have a payment past due – I have to be past due to qualify for a modification.

The Truth:
22. Do I need to be behind on my mortgage payments to be eligible for a modification under HAMP?
No. Responsible homeowners who are struggling to remain current on their mortgage payments are eligible if they reasonably believe they are very likely to default on their mortgage soon (often referred to by loan servicers as "imminent default"). This might be because a homeowner has had (or will have) a significant increase in the mortgage payment (due to a payment adjustment or rate adjustment upwards); unemployment or some other significant reduction in income; or some other financial hardship that will make the mortgage unaffordable. If you are facing a similar situation, contact your servicer. You will be required to document your income and expenses and provide evidence of the hardship or change in your circumstances.

Borrower Frequently Asked Questions/MakingHomeAffordable.gov

Responsible Modification Incentives:
Because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include an incentive payment of $1,500 to mortgage holders and $500 for servicers for modifications made while a borrower at risk of imminent default is still current on their payments.

U.S. Department of the Treasury Making Home Affordable
Updated Detailed Program Description, March 4, 2009

We will consider a loan modification for a Borrower who is not delinquent in his or her Mortgage payment, but is in imminent danger of default, as long as the Borrower has an involuntary inability to pay. In addition, even if the Borrower is not experiencing or has not experienced an involuntary inability to pay, we will consider a loan modification if the property is a Manufactured Home and you believe it is in our best interest.

Freddie Mac Single-Family Seller/Servicer Guide, Volume 2
Chapter B65: Workout Options
B65.14: Borrower requirements (08/20/09)

Other key features of HAMP include:
• Financial incentives to encourage investors, servicers and borrowers to execute sustainable loan modifications(2)

(2)For example, servicers will receive one-time incentive payments of $1,000 for each eligible modification meeting the requirements of the program, an additional payment of $500 for modifications made while the borrower is still current, and a “pay for success” fee of up to $1,000 on an annual basis for three years. Borrowers who make timely payments for the first five years will receive annual principal reductions of up to $1,000.

Statement of Edward L. Golding, Freddie Mac Senior Vice President–Economics and  Policy,
before a hearing of the Congressional Oversight Panel
September 24, 2009

8) The Lie:
Foreclosure can proceed while your HAMP review is ongoing
The first written communication I received from Wells Fargo after my initial submission of documents in March 2010 includes the following statement: "Please note any collection and foreclosure action will continue uninterrupted until approval."

In September 2010 I was informed by WFHM customer service representative Kelly at(877)242-4017 that “collection and foreclosure efforts may continue during this review."

In her January 4, 2011, letter, Agnela Cook from the WFHM president's office writes,"Please note: all normal collection activities, including the foreclosure process, continue until arrangements have been approved and a signed agreement has been returned."

The Truth:
Under MHA guidelines, participating servicers must evaluate all eligible homeowners for a HAMP modification before referring them to foreclosure. For those homeowners that were already in foreclosure proceedings, Treasury guidelines require servicers to stop the foreclosure proceedings while the homeowners are being evaluated for HAMP. Should a homeowner not qualify for HAMP (or if the homeowner fails or cancels the modification), participating servicers are required to evaluate that homeowner for alternative loss mitigation modifications, such as HAFA, or one of the servicer’s own modification programs. If a homeowner proves ineligible for an alternative modification, servicers are required to evaluate that homeowner for a short sale or deed-in-lieu of foreclosure.
If all of these efforts are unsuccessful, participating servicers may not proceed to foreclosure unless they have issued a written certification to their foreclosure attorney or trustee stating that “all available loss mitigation alternatives have been exhausted and a non-foreclosure option could not be reached.” Only after these steps are taken and the certification delivered, may the foreclosure process proceed.

Written Testimony of Phyllis Caldwell, Chief of Homeownership Preservation Office, U.S. Department of the Treasury, Before the Congressional Oversight Panel,
October 27, 2010

Q1101. Foreclosure actions (with the exception of those in Georgia, Hawaii, Missouri and Virginia), including initiation of new foreclosure actions, must be postponed for all borrowers that meet the minimum HAMP eligibility criteria.

Supplemental Documentation—Frequently Asked Questions
Home Affordable Modification Program
July 15, 2010

"A servicer may not refer any loan to foreclosure or conduct a scheduled foreclosure sale unless and until at least one of the following circumstances exists:

  • The borrower is evaluated for HAMP and is determined to be ineligible for the program; or
  • The borrower is offered a trial period plan, but fails to make a trial period payment by the last day of the month in which such payment is due; or
  • The servicer has established right party contact, has sent at least two written requests asking the borrower to supply required information in accordance with this Supplemental Directive and has otherwise satisfied the Reasonable Effort solicitation standard, and the borrower failed to respond by the dates indicated in those requests; or
  • The servicer has satisfied the Reasonable Effort solicitation standard without establishing right party contact; or
  • The borrower or co-borrower states he or she is not interested in pursuing a HAMP modification and such statement is reflected by the servicer in their servicing system."

Supplemental Directive 10-02
Home Affordable Modification Program –
Borrower Outreach and Communication
March 24, 2010

9)The Lie:
All these stupid games we're playing are the investor's fault
"The investor" requires paperwork be sent over and over, has very strict guidelines we must follow, won't allow us to modify your mortgage ... You'll hear all these over and over again. All that nonsense Wells Fargo put me through was the fault of the investor, not WF. The most blatent one I got came right from Wanita Nelson, an executive mortgage specialist in the WFHM president's office. When she was explaining to me that I hadn't qualified for any of the company's "in-house" mortgage modification workouts, I asked her to please explain clearly the workout options that were considered for my situation. She said the two options considered were extending my mortgage to 480 months (40 years) and dropping interest to 2 percent. I ask again about workout options and note that she didn’t mention that a decrease in principal was considered. Oh, she says, “we’re really not doing principal decreases.” Well, I say, that is one of the work-out options listed in the Freddie Mac servicer guidelines, which she had previously confirmed were in force regarding my review. She said she would look into that and let me know why that wasn't considered. That was in late October 2010 and to date I have gotten no answer.

The Truth:
When Denying Loan Mods, Loan Servicers Often Wrongly Blame Investors

Herb Allison, the assistant secretary for the Treasury ... pointed [out] that principal forbearance is an option for servicers to get a borrower's debt-to-income ratio down to 31%, but that it is seldom used. He added that the Administration remains open to a program that tackles the negative equity issue.

Treasury Changes Guidelines for Getting Borrowers into HAMP
January 28th, 2010

10)The Lie:
You can't get a mortgage modification because you are still making payments #2
"A quick look at your file indicates to me that you are not currently in default nor do I see that you are in a foreclosure status. I will tell you that the Treasury Department, which establishes the guidelines for this specific government program, is quite restrictive in granting modifications to people who are current on their loan.  The basic logic being that if one is current on their loan, what is the extenuating hardship necessitating a modification?" 

Email from Mark Tinsley, HAMP Loan Processor, Wells Fargo Home Mortgage
Fri, 23 Jul 2010 09:30:45

The Truth:
See Lie #8 above

More Lies >


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