This a letter I wrote to Congresswoman Barbara Lee ,CA 9th, seeking assistance in loan modification for a young couple in her district. For privacy, I have removed their names.... so, the bloodbath and lies continue...
January 7, 2011
Representative Barbara Lee
2444 Rayburn HOB
Washington, D.C. 20515
Via Fax: (202) 225-9817
RE: Ramona Ave., Piedmont, CA 94611
Dear Congresswoman Lee;
Dear Congresswoman Lee;
I am writing on behalf of the above referenced couple, residents of your district. They purchased the above captioned residence five years ago at the peak of the real estate boom. Using what the mortgage industry refers to as a piggy-bag loan; a first mortgage combined with a second or Home Equity Line Of Credit (HELOC) the home was financed by Wells Fargo Bank. This financing package was structured by the bank’s representative as a 7/1 Fixed ARM first loan, and a 5 year balloon second lien. Frankly, in my almost thirty years in the industry I cannot recall ever having seen this sort of “dangerous” financing funded by a major bank. As it absolutely would require a refinance, this sort of financing arrangement could only be deemed self serving by the bank and broker involved; while at the same time place their client at the complete mercy of the market.
Last September, realizing that the loan was coming due, the (name deleted) contacted me seeking a possible refinance. They have managed their personal financial affairs in a manner that, as parents, would make you and me proud. Credit scores exceed 800, excellent job history, they have some reserves, and easily qualified for the financing required. All payments have been timely. However, as you know, both the property and applicant must “qualify”; and in this instance, due to the real estate crisis, the appraisal was returned at a level not adequate to provide the required Loan-To-Value.; leaving them with only two options, a loan modification or a short sale.
They then contacted Wells Fargo seeking a loan modification in ONLY the term of the loan... they are “OK” with the 7% interest rate... they are NOT seeking a principle write down, ONLY a common sense modification in the term of the loan! A very common sense business approach to this situation, enabling them to keep their home and credit intact; and Wells Fargo to keep a performing asset on their books..
Yet, WFB is virtually refusing to cooperate... refusing to honestly consider making this sensible business decision. To the contrary, as the course that that Wells Fargo is now embarking upon, a course destined to make a shambles of a hard earned credit history.
Despite what the banks are telling members of congress, from my firm’s first hand experience, the lenders are refusing to even consider any loan modification until the homeowner first becomes delinquent. for a minimum of sixty days; an act that reduces a credit score by some 140-180 points! The bank’s analyst is following the industry “MO”, by delaying, losing documents, failing to return calls and or writings; and in general guilty of bad faith dealing. On Monday the 10th of January, their grace period runs out; and the process of destroying this couple’s credit commences.
This past week Wells Fargo issued a press release announcing that it was going to “voluntarily” modify a vast number of the Wachovia/World loans that it had acquired through a purchase from the FDIC. We both know this act was strictly for the media, and to indicate to congress that the management of Wells Fargo wears a white hat as it drives the stage coach! By their very actions, and benefiting from the loan loss guaranties provided by the FDIC insuring the bank a substantial profit (on the backs of those homeowners) this announcement is a pure sham.
I write you, pleading with your office to, in any way, in any manner intercede on behalf of this young couple. They deserve a better fate than that being thrust upon them by a bank, which has, is and will continue earning huge profits in no small part through the generosity of “We the People”.
Thanking you in advance for whatever assistance you may offer, I remain
Very truly yours,