5/1 ARM I/O Wells Fargo Mod

[B Stevens]

I found this site 3 months into my modification. Moe, thanks for a great site that helps people without charging them fees or making them buy something.

I have a 490K loan with a 64K second from a credit union. My current interest rate is 5.25% and will hold for another year. I can barely afford it since my wife was laid off. She isn't on the loan so I was skeptical to even try but it seems the process is moving forward.

In mid Feb 09 I tried to refi through WF who told me I would have to put the difference between the value of my house and what it was worth to do the refi. They also told me I didn't qualify for a loan over 417K.

Called HOPE who couldn't really help since I didn't have any credit card bills and wasn't behind on my payments, Called WF Loss Mit who couldn't help because I wasn't behind on my payments. I explained to them (over a period of 2 weeks) that I have depleted my 40K in savings and I wasn't going to be able to keep making the payments. Finally they sent me out some paperwork to fill out.

Got my 2 pay stubs, financial worksheet, and hardship letter. They also asked me to provide at least 2 possible solutions to make my loan sustainable. So I did. I included the fact I have paid 100K in interest in the last 4 years. One of my possible solutions included swapping me into a house 1000 sqft smaller, in similar condition and in the same zip code figuring they couldn't ruin my credit if they gave me another loan, plus my family would have a house to live in.

I ended up having to fax the same information over 3 times between mid Feb and late April. Each time they said something was missing. Each time I sent over the same information with updated pay stubs. (It would have been nice to have that executive number)

Now I am at this point according to https://www.wellsfargo.com/jump/mortgage/assist

Step 1 Reviewing your account COMPLETED
Step 2 Determine available options COMPLETED
Step 3 Processing your agreement IN PROCESS
Step 4 Completed loan modification NOT STARTED

I do have a couple of questions.

Can they refi my loan into something they said I couldn't qualify for before?

Are taxes and property insurance considered part of the debt to income ratio?

If they are, they would have to lower my interest rate to 2% over 40 years and reduce my principal by 120K to get me in the 31% DTI. Has anyone heard of banks going to that extreme before?

Any idea how much longer this will take?

Thanks

[soccer10]

If you are going through the government program here are the guidelines

http://www.treas.gov/press/releases/...guidelines.pdf

To answer your question Principle, interest, tax, insurance and homeowners association are used in the Front end DTI, read through the documentation, in my opinion well worth the read to figure out what is some of the criteria. With this program it is a little more black and white than the rabbit lenders pull for their own modification programs. However, there is still that pesky subjective verb of "hardship." That is always the $64k question, will they think I have a real hardship. It is more complicated than that otherwise there wouldn't be 17 pages to read!

[B Stevens]

Got a call from WF today asking for a verbal update of monthly expenses. Let them know I was making more since my paychecks are tax free for now. (workers comp) It put me at a +- $200 surplus instead of the $500 deficit. The WF rep said that was great because it gives the negotiator more options. I am not not late on my first or second mortgage so far.
No car payments, credit cards or anything to create a back end DTI increase. Still hoping for something good.
He said the workout options are taking about 60 days from the time the case is assigned to a negotiator now. Waiting really sucks

[waitingpatiently]

Hi B Stevens,

I'm also with WF and I've been trying to get my loan modified since March 2009. Just today it seems that I got some results after having many discussions with the Executive Office...You can read my story on my post called "when it is time to call WF executive offices".

Has your file be sent to a negotiator yet? And have they ordered a BPO on your property? If you know the answers to these questions you might have a better idea as to when you'll get an answer.

All I know is you have to stay on WF like crazy! I have to say from experience 1/2 of the people in Loss Mitigation I encountered don't seem to know what they are talking about...basically they are reading off the screen in front of them. I had a rep today tell me that my investor (freddie mac) changes everyday...so one it's freddie mac, and the next day it could be someone completley different.

I called the executive dept. with what I thought was a legit complaint about loss mitigation, and the man who answered the phone immidiately emailed my negotiator and her supervisor...within 2 hours my www.wellsfargo.com/assist said Step 3 -COMPLETE (it previously said PROCESSING). My advise stay one them like glue, take seriously good notes so you can call them on discrepancies, and call them often! I've been calling every day for the last 2 weeks.

Good Luck - Keep us posted~

[B Stevens]

I called a rep on 6-5 who supposedly emailed the negotiator about a BPO. I received a call today so maybe he did. My investor is not freddie mac or fannie mae so I know some of my options are limited. My file was assigned to a negotiator on 4-28. I will be sure to update anything I get here. Thanks

[waitingpatiently]

At least you got a call from someone, that's good news. I'd call and ask if they've done a BPO yet. Once my BPO was done they said they'd have answer within 1-2 weeks. Looks like you've been in the system about as long as myself. My original negotiator was assigned on 4/30 my paperwork was received by them on 3/25. So I'm over the 60 day mark.

The fact that someone called to get updated info. is a good sign (I would say) because I never once received a call from anyone! I would just keep calling a couple times a week, and keep asking questions every time you call. I have to say I got a little obsessed there for a bit, but when I started to feel like Loss Mit. was giving me the runaround I didn't hesitate to call the executive dept...so keep that # handy you might need it. Good Luck, I'll be watching for new posts from you!

[Alexis]

Beware, we too are with ASC/Wells & they ordered a BPO & we were charged $150 for it. I called exec offices to find out if that is legal & was told yes. Paid it as it was showing as outstanding on mortgage due, then we were denied our loan mod request!! Alexis

[ugh_2009]

I don't think they are allowed to charge for the BPO -

"Servicers may not charge the borrower to cover the administrative processing costs incurred in connection with a HAMP. The servicer must pay any actual out-of-pocket expenses such as any required notary fees, recordation fees, title costs, property valuation fees, credit report fees, or other allowable and documented expenses. Servicers will not be reimbursed for the cost of the credit report(s)."

[B Stevens]

For the last 2 days, the assist site has only showed this for a status, "We are unable to provide you with information about your loan through this Web site. For additional information, please call us at 800-678-7986. "
Of course no one is available until Monday. I am hoping the site is just down. If it isn't, this can't be good.

[waitingpatiently]

bstevens,

I think it's down...because I got the same message. On Friday I checked and I was back to Step 2 - processing, so I freaked out and called the executive dept. (who I've been working with) and they said the workout tool was having some issues, as they got many calls about it Friday...She confirmed I was indeed still in Step 4 - processing

So not to worry, I think it's just down.

-waiting

[B Stevens]

Thank you waiting. I was a little worried.

[B Stevens]

Just an update -
On 7-1-09 I called the WF Exec and spoke to Jennifer. She said I needed to provide answers to questions about why my mortgage was now $54 a month lower and why I showed a balance on my credit card. So I explained the Prop 8 tax was decreased $600 a year (from $8100) and I had to pay for a my kids dental work.

I was told that was fine and to call back next week. So I called on 7-6-09 and spoke to Jennifer again. Now I needed to resubmit my financial work sheet, 2 pay stubs and hardship letter again. I told her this was the 4th time they were requesting the same paperwork but it really didn't matter to her. The "negotiator" was requesting it.

It seems after all the faxes of information, the loss mitigation still doesn't have the numbers right and they somehow show a $1800 surplus! Now I have to fill out a worksheet again and fax it directly to the exec team. This sucks!

[B Stevens]

After my paper work was faxed to a M. Heil at WF Exec on 8-28-09, I received a phone call today letting me know I was too far under water to get a permanent refi to a fixed rate. My investor is not Fannie Mae or Feddie Mac.

I was told in an effort to assist with my hardship, they would lower my interest rate on my I/O to 3% for 5 years. This would bring my 1st down from $2900 a month to $1900 a month. Taxes and Insurance are included on both. It seems by working out the numbers, my investor (whoever) is basing the numbers on the currest value of the home and the current I/O interest rate (maybe .5% less) than the current rate.

Now the hard part.

Option 1 - This saves me the trouble of moving and about $50K over a 5 year period. But it also is a new contract and the fraud I found will be null and void leaving me with no legal power in 5 years when this MAY happen again.

Option 2 - Stop making payments, claim fraud and breech of contract. Delay the forclosure for about 1 year. I could save about $45K in 1 year of no house payments and have my wife be the primary buyer on the next house with that down payment.

[calgirl67]

Originally Posted by B Stevens

After my paper work was faxed to a M. Heil at WF Exec on 8-28-09, I received a phone call today letting me know I was too far under water to get a permanent refi to a fixed rate. My investor is not Fannie Mae or Feddie Mac.

I was told in an effort to assist with my hardship, they would lower my interest rate on my I/O to 3% for 5 years. This would bring my 1st down from $2900 a month to $1900 a month. Taxes and Insurance are included on both. It seems by working out the numbers, my investor (whoever) is basing the numbers on the currest value of the home and the current I/O interest rate (maybe .5% less) than the current rate.

Now the hard part.

Option 1 - This saves me the trouble of moving and about $50K over a 5 year period. But it also is a new contract and the fraud I found will be null and void leaving me with no legal power in 5 years when this MAY happen again.

Option 2 - Stop making payments, claim fraud and breech of contract. Delay the forclosure for about 1 year. I could save about $45K in 1 year of no house payments and have my wife be the primary buyer on the next house with that down payment.

Only you can make that decision. I guess the bottom line is: do you want to stay in your home or do you want to move?

Where did you find fraud. Lead me in the right direction 'cause I have a 10/1 WF mortgage too... and thos docs look a bit shonky to me.

[B Stevens]

calgirl67 -

I just signed a temporary loan mod reducing my interest only rate from 5.250% to 3% for 60 months. It lowers my payment from $2900 to $1980 Both figures include tax and ins.

For the fraud - I am going to go through a process to prove the fraud with Wells Fargo Bank N.A. showing as my Trustee and Beneficiary. This is recorded eventhough a private investor is the beneficiary. About 5 years ago, banks were no longer required to file the note with the county clerks office. By not filing the note, the banks can secretly sell/transfer the note without anyone, including the Trustor, knowing who holds the note. This also seperates the note from the trust deed. The process is starting there.

Now for my modification. I spoke to Mathew Heil and sent all of my information over to him. The only way he was able to reduce the interest rate to 3% is by doing a temporary change. The investor gives them the authority to make temporary changes without having to get final approval from the investor. There were no fees added, no time added, and no changes to the repayment obligation. It is not HAMP or a government backed modification. I was not behind on my payments and my credit was not affected.

[Jakeman]

B Stevens,

I'd love to chat with you as I'm going through an identical thing with "Wells Fraudo" right now. I'm hoping you'd be willing to share some of your experiences so that I can use this as leverage....thanks.

[B Stevens]

Jakeman - I can't figure out how to send a pm. email me your phone number superchaosbryan (at) hotmail (dot) com

[Jakeman]

After writing me off numerious times and sayin that the "Investor" wasn't willing to do anything until my I/O loan converted to a variable August 2010.

I clearly proved imminent default and one of the Sr. Executives had the individual I'm working directly with order a Broker Price Opinion (BPO).

I'm not sure what this means. From the Investor's perspective, do you know if it is better for my house value to come back low versus high relative to the balance?

I have 1st and a 2nd with Wells. Will the investor only look at the BPO relative to the 1st?

I know that you said Matt Heil stated you were too far underwater to do a permenant modification...don't get that one bit.

[B Stevens]

This is going to be a long answer,

First, the BPO is for the bank's benefit. If you default, what will they be able to get for it if it is sold again? If it comes in over what you owe, you get no help since you can sell it to someone who is currently able to pay for it. If it comes in below what you owe, how much can they help you before it would be more profitable for them to watch you walk away? They are not on your side, ever.

From what I put together from Mr. Heil and the WF Rep at the NACA convention, borrowers with great credit getting an I/O loan were sold to investors requiring a top rated investment portfolio. The better your credit, the less likely you would default. Investors pay extra for those loan pools since there are safeguards for the rate of return. There are also contracts in place on what information can be divulged about the investor and the investment. The investment also has stipulations on what can be changed (interest rates, principle value, time on the loan, etc.)

My current investor is still unknown to me. The rep told me my loan was sold the day I signed my escrow papers and may have been sold numerous times between portfolios. When the bank initially sold my loan, my house as well as my good credit were used as collateral against default. When my house lost value, they depended on my good credit to sustain the value of the loan.

The sad part is my good credit isn't enough to qualify for a loan without collateral equaling the value of the loan. So I cannot get a permanent mod if my house is worth $380K and I owe $490K without me having something worth the difference of $110K. It tells me they shouldn't have made the loan in the first place but that is another story.

Why you ask? WF does not want to ruin the credibility of their investment portfolios. If a "safer" portfolio was in trouble, how would they get more investors? Their reputation would take a big hit. Their "grade AA" would be junk.

Leverage. I am not sure I used any. I showed my bills. I explained where I cut back on frills (land line, tv, lower insurance coverage, anything I didn't "need") and was still struggling to pay the mortgage. I didn't ever tell Mr. Heil I didn't want to lose my house. I told him I didn't want to lose my credit. After all, if everyone has bad credit, who will they be able to loan to? How will they be able to offer the "grade AA" portfolios?

I tried a radical approach citing sensible (to me) facts. It didn't get me a permanent mod which is what I was looking for but it did get me 5 years of breathing room to take my next step of proving fraud, predatory lending, and non-disclosure problems. I am not going to try to get my house for free but I am going to try to get the house removed from the collateral backing the loan.

[podge8]

B Stevens,
I think I'm in the same boat as you, my mortgage being sold as class A securities. I'm interest only as well for the first 15 years, and put 20% down. Wells did offer to reduce our interest rate by 1% for five years, from 6.375% to 5.375, but no permanent mod. Also, they said the investor requires a 3 month trial, in which we are not guaranteed a mod in the end, but only would be considered. Also would be reported as delinquent to credit agencies. We can't have that happen to our credit so we declined the trial (we are current), but still trying to get them to give us the mod without the trial. I think the trial period is BS, because I read the pooling and servicing agreement for our MBS trust, and it says Wells has discretion in doing the forbearance (trial), and so it shouldn't be required. But it did mention that permanent interest rate reductions are not allowed, so that's probably why we're getting the 5 years instead of for the rest of the loan. Did they require you to do a trial period? Did you just get the mod without a trial? Do you know what securities trust your loan was put into?

[Jakeman]

B Stevens...thanks for the response. You are obviously very knowlegable on this topic so I appreciate you taking the time to share this with me.

I figured the BPO was somehow in WF's best interest. I have a 1st and a 2nd with Wells. This is where my biggest struggle has been in proving imminent default. If they continue to ONLY look at the balance of the 1st, things look fine. It's when you factor the holistic picture.

For example: The balance of my 1st is $400,000. The balance of my 2nd is $100,000. Realistically, my house is worth $475,000. SO...if they only consider the 1st I'm screwed. I continue to continuously struggle in getting them to understand this simple concept.

What advice do you have if how I should proceed with the above? Worst case, I proposed a 5 year temporary modification...stating that it would allow me to regain equity and ultimately refinance to a fixed rate with Wells Fargo...although there would be no way in hell if I ever had the chance to refi that I would give these crooks more business.

Thanks in advance for your advance.

[B Stevens]

I have no idea where my loan is.

I was not required to do trial payments or have my interest rate rise higher than the 5.25% of origination after the 60 months @ 3%.

The bank will make you pay what THEY think you can afford. They will attempt to retain you but they are not going to help you more than they need to. From what I understand, trial payments are not considered full payments and hurt your credit. Do you know if that is the case?

[Jakeman]

I'm almost positve that the trial payments hurt your credit. They offered us a forbearance trail and my research proved to show that they report it to the credit bureaus as "Partial Payment". It is not perceived as bad as bankruptcy, but it's pretty deterimental.

Very ironic that they PURPOSELY ruin your credit considering your earlier point of if everyone had bad credit...who would they be able to lend money to.

Pure criminals....

[B Stevens]

Jakeman you are in a tough position. You know WF is looking at your numbers and thinking, $25K ? What would be their incentive to lose more than that on a modification? In my situation, they chose to lose $60K instead of $110K (plus whatever other damage I could cause like making my 8 bed/ 4 bath home into a 2 story studio with 4 extra laundry rooms). No I didn't threaten that but it did cross my mind. I also owe $60K on a second making my total debt $550K on a $380K house.

As for advice, I really think they are going to offer you to do a short sale instead of a loan mod. You have to take the big picture into consideration. What is best for them and their investors first and then what is best for you. They can sell your house for someone proving they qualify for a $475K loan. Why would they try to retain you when you are trying to prove you can't qualify?

I am not trying to be mean or tell you to give up. I am trying to get you to see it from the bank's perspective. With all that being said, what can you offer the bank to retain you as the borrower? That is what you need to think about. That is where you need to start the bargaining process. You need to show them how and why it is a "win-win" to consider your solution.

Personally, if I was $25K underwater on a $500K home, I would ride it out until it becomes more underwater or appreciates to where you do not loose whatever money you put down. If you put it up for sale, you would have to factor in realtor commissions on the asking price. The BPO will be important with you so close to the loan amount so if you can, just wait for it. You will have to call to get it. It takes about 2 weeks.

I am not sure what your hardship is but it sounds like you are able to make the payment now but you won't be able to make the payment in Aug 2010. You also said you proved imminent default. Is that immediate or in 2010?

HAMP and other programs should come into play but we are not dealing with a government backed investor.

Again I am not trying to be a naysayer. I am trying to get you to see the situation as the bank sees it so you can have a starting point and understand what may be offered to you.

[Jakeman]

I do not take your comments as being mean whats-so-ever and absolutely appreciate your "from the bank's perspective. That is exactly the mindset I need to be in if I'm going to get any help at all.

Imminent default would not be until August 2010. I got deined under HAMP twice with no real explanation other than "The Investor is not willing to do anything until the time it converts to a variable". That is BS...if it's inevitably going to be an issue...let's address it now.

Like you, I'm not trying to get a free house or free ride...I just want a little assistance. I have proposed something as simple as keeping my terms the same other than pushing the "Next ARM Change Date" out 5 years. So essentially, I would continue paying the same 4.38% rate that I am now (as well as only interest) for 5 additional years versus it converting to a variable in August 2010 and being amoritized over the remaining 23 years on the loan...that is what screws me the most.

Considering my above proposal of keeping the same interest rate during the next 5 years, even the $25,000 difference on what my house is worth versus what they would lose if I walked away seems somewhat less of an issue.

I got fed up and emailed 6 Senior Executives last week. My direct contact called me immediately and was kind of angry. She then called back 5 minutes later singing a completely different tune. She indirectly made the comment that one of the Sr. Executives I emailed to "kick all the tires on this"...I'm assuming meaning looking at every potential option.

My 2nd is with Wells Fargo also, so I'm hoping that has a little leverage