Urgent help! Wells Fargo

[nickysduck2]

I got a home loan with Wells Fargo Financial back in 2006 and the original loan had a fixed rate for 3 years that would adjust after the 3 years.A year ago my husband and i went through a group called N.A.C.A ad got our home loan modified for one year.Our payment dropped by $300 per month and the forbearance agreement that Wells Fargo sent us clearly states that the interest rate charged during the forbearance period and after will be FIXED. They put fixed in all caps on the contract. It states that the rate will be FIXED at revert rate 7.8800% at the end of the forbearance period.

The forbearance period is up on September 9 2010 and I recieved a letter from Wells Fargo telling me that our payment will return to normal and that if we had a varibale rate on our original contract our interest rate may change according to our original note. how can they tell us our rate will go up when the forbearnce aggremment clearly states our rate will be fixed after the forbeance period? What can I do?

[jq26]

The first thing I would do is call them. Have they explained why their new letter contradicts the written agreement? Maybe it is a mistake.

[2ndTimeAround]

I got a home loan with Wells Fargo Financial back in 2006 and the original loan had a fixed rate for 3 years that would adjust after the 3 years.A year ago my husband and i went through a group called N.A.C.A ad got our home loan modified for one year.Our payment dropped by $300 per month and the forbearance agreement that Wells Fargo sent us clearly states that the interest rate charged during the forbearance period and after will be FIXED. They put fixed in all caps on the contract. It states that the rate will be FIXED at revert rate 7.8800% at the end of the forbearance period.

The forbearance period is up on September 9 2010 and I recieved a letter from Wells Fargo telling me that our payment will return to normal and that if we had a varibale rate on our original contract our interest rate may change according to our original note. how can they tell us our rate will go up when the forbearnce aggremment clearly states our rate will be fixed after the forbeance period? What can I do?

I understand you situation -due to rules of the Forum, I cannot be soliciting you. I don't know all your details, will comment the best I can.

The modification you received was horrible!!

People think they can save a a few dollars by trying to negotiate their loans by themselves or using a free service. Homeowners need to realize their home is probably the biggest investment of their lives. Not done correctly can costs $10,000's of dollars more into the loan, if not moving closer to losing their home to foreclosure.

NACA provides free workshops for homeowners that are looking to apply for a loan modifications. "Free" - means NACA is probably getting paid by the lender. Any modification you receive from them, will be benefiting the lender.

Yes there has been people that went successfully through NACA, and got a mod helping them, but you have to ask the question. If a home owner went through with an Attorney representing them, would the homeowner received a better loan modification?

Modifications are costly to Lenders, because they need to tailor the plan to the individual borrower. The work is time-consuming and requires staff, which cannot be billed back to the investors. Direct out-of-pocket expenditures are reimbursable to servicers, yet the operating costs, such as labor is not.

On the other side, foreclosures are deemed less expensive because they do not require working with the borrower and many of the expenses are billable to investors. This is the reason why we are seeing Foreclosures rise across America.

What I am seeing on completed modifications with interest rates 7% and above. They are getting modified in fixed rate for the life of the loan at a lower interest rate. On situations with the existing rate is below 7%, these are going into 5yr programs with a lower rate / payment, which after reverts back to the rate it was originally.

In both situations above - any and all arrears are restructure to the back end of the loan. In the last three years of doing modifications, none of my clients were put into a forbearance (2nd payment) repayment plan.

Sadly - your situation is an example of working with the lender. If you want to try to compare anything. Look at the results of what people are getting on their own, and the results of what people are getting through attorneys.

One case recently completed in June - through Wells Fargo, home owner was 18 months down, 7.5% adjustable Arm. He was a bus driver for the MTA in New York city. The MTA over the last year has been eliminating jobs, and reducing hours. When I helped help write up his application and explain his hardship. The hardship indicated was something he could not control. They received 2.89% fixed for the life of the loan with all the arrears restructure in to back end of the loan..

After 12 months you can reapply for another loan modification. Right now you are in a probationary period, so it is mandatory you do not go late. You do mention September 9th, that might be the date you can reapply.

Similar to your case - took in a case from Virgina this week (which is also a non judicial state), they are three months down in their probationary period, and have been trying to work with their lender for the last year.

Right away we contacted the lender with a Moratorium to stop their impending foreclosure.

Are you upside down on your value to what you owe? That in many cases - does have an impact on what / how fast your lender works.

I do not know your monthly gross income, but you need to figure what 31% is, and explain to the Wells Fargo you can not afford any payment increases.

Are you or your husband self employed? Through a self generated P/L statement, you can state your income (similar to the old stated loans), but your income has to what you are putting into your checking account.

I do not know what you said for your hardship. When you reapply, you need to explain default is imminent with the lender unless they work with you. I am seeing people how are two months or more late on their mortgage are getting better modifications, compared to people who are not late show they can afford their mortgage payments.

Another example is a lady (Maria) in New Jersey, she is in an option arm making the minimum payments. Every month she makes the minimum payment her balance grows due to negative amortization. She works off the books, she cannot apply to refinance out into a better loan. She refuses to go late on the minimum payment, because it will effect her credit score. I submitted her file 9 months ago, we have been trying to negotiate her loan terms into a low fixed rate. Her lender is saying because she is not late, she can afford her loan and has put a "Hard Stop" on her modification. After nine months, today I submitted paper work to have the fee is paid us returned.

Point - by making the payments set forth by your lender, with them receiving your payments, you are not showing them a hardship. Some people do go late, to prove their case. Especially if a house is upside down, you have more to gamble with because your lender can lose more money by foreclosing on you.

I want to state - nobody can force you to go late on your payments, because it will effect your credit score and subject your house to foreclosure.

I also want to inform you - Tennessee is a non Judicial state, if you miss a payment now being that you are in your probationary period, the lender can right away move to foreclose on your home. Without the help of an attorney to negotiate a Moratorium, again if you do go late you could lose your home.

I think what you need to do is talk with someone, other than your lender. Possibly a mortgage attorney (not a bankruptcy attorney), that can show you a history of working successfully with homeowners. That can review your documents, what your details are and help you choose the best path to take.

I wish you luck....

.

Edited August 17, 2010 by 2ndTimeAround

[ruttie]

I received a modification

Edited November 19, 2010 by ruttie

[2ndTimeAround]

....We are approx. 300-350 upside down on this home & cannot justify trying to even keep up with the new modification payments.????

Ruttie

You are in Az - which is a non practical state, a trustee state. See that your lender modified your loan to a temporary interest only, tells me they don't want your property.

In your case I have a much better suggestion. Being that you are $300-$350 upside down, recommend you do a short refinance to 90% of the current value.

Over the last month I have been going through training concerning mortgage principle reductions. There are many companies on the west coast, that do MPR's. Here on the east coast - other then Florida, few firms are doing them.

I have been calling west coast company's to further understand the process.

The problem I am finding - companies are charging the home owner $2500 to $4300 to start working on their file. Other then the cost for the new appraisal and an application fee, it is against banking law to collect an upfront fees on a refinance.

People are saving big time off the original loans. This will lower your monthly payments because of the smaller loan size. You will be financing into a 30 year fixed rate, similar to interest rates on FHA loans.

The problem I am seeing is people do not have those type of funds to pay in advance.

The way this process works, you are being qualified to a new bank refinancing into a new loan. Once qualified, a formal offer is presented to your existing bank, to payoff the loan at 90% of the current value.

Coming up in October of this year, the government will be making a formal announcement. They are going to pushing MPR's across America.

Similar to the cash for clunker program we had last fall for trading in your old car exchanging it for a new one. This program is designed to help boost the economy by introducing new money into the private sector. The current lender is being reimbursed for 80% to 85% of their loss from TARP funds. They can write off the rest and take what would have likely become a problem loan off the books.

Must have steady verifiable income. Your credit score is not looked at. You have to be 2 months behind on your mortgage. Property must be your primary home. Need to have an LTV of at least 125%. No open Bankruptcies.

There are more principle reductions in states hardest hard by the drop in value. On the east coast - seeing less homes qualify because to value drop wasn't as much, and or the value can return in a few years.

As in loan modifications, principle reductions is a case by case determination. Every case is different as too the resolution and time it takes to complete the file.

Ruttie - being that you are in a probationary payment plan, you will be gambling a lot if you go late to try and qualify for this program.

Once you go late on a probationary payment plan, you could be subject to an immediate trustee sale. You really need to be careful. But being so much upside down or your current loan, the cards are in your favor.

Good Luck

.

Edited August 18, 2010 by 2ndTimeAround

[jq26]

An MPR seems like a good option, but keep in mind that in almost all states (it may be all), refinancing of the original nonrecourse purchase money loan converts it into a recourse loan (ie you are sued personally for any deficiency). In many states, this isn't an issue because purchase money protections are weak, but in other states this refi can attach liability on someone where there is none.

Any insight into this 2ndTimeAround during your training?

[2ndTimeAround]

An MPR seems like a good option, but keep in mind that in almost all states (it may be all), refinancing of the original nonrecourse purchase money loan converts it into a recourse loan (ie you are sued personally for any deficiency). In many states, this isn't an issue because purchase money protections are weak, but in other states this refi can attach liability on someone where there is none.

Any insight into this 2ndTimeAround during your training?

Good Question - simply the homeowner is refinancing into a new loan. The old loan is going to be satisfied. Once you understand the process, it is really easy to understand. Frankly everybody walks away as a winner.

Unfortunately principle mortgage reductions do not include 2nd mortgages. Before embarking on one of these types of programs, a home owner needs to be really organized on how / what steps they are going to be taking. They should speak to someone to about their situation for the best out come.

For those who do not know what a recourse loan is - Lenders are allowed to go after you for amounts that you owe.

I see this a lot regarding 2nd mortgages. If you default on a on the loan, the 2nd mortgage lender can go to court seeking a judgment. The lender can bring legal cases against you, garnish your wages, involving the sheriff (worst I've heard) to confiscate personal property try to satisfy the amount you owe. The best possible out come I have seen of getting rid of a 2nd mortgage, is settling at a lower amount. Noting a Chapter 7 Bankruptcy would dissolve the loan but damage a persons credit.

A non-recourse loan does not allow the lender to pursue anything other than collateral. For example, if you default on your non-recourse home loan, the bank can only foreclose on the home. They generally cannot take further legal actions against you. The bank is out of luck even if the sale proceeds do not repay the loan.

Again - the home owner is refinancing into a new loan with the first mortgage. Part of the negotiating - the existing Lender is filing for a TARP rebate 80% to 85% for their losses.

Also noting how much a bank will be lose if a foreclosure took it's course. On $200,000 loan amount for example could cost the lender as much as $70,000 in fees which is not reimbursable. Why wouldn't the existing Lender jump on this?

The goal is to reduce a mortgage payment and keep the home owner in the home. There is negotiating with the goal is settling the "bad loan" with the existing Lender.

Again - a problem I am seeing, people are being scammed out of money. Companies are charging the home owner an excessive fee to start working on a file. These types of companies unregulated, are operating around the law, and are in it for the profit.

..

Edited August 18, 2010 by 2ndTimeAround

[Rebecca Hall]

Hi,

Please call this number 512-961-6974 and get more financial information

Thanks,

Rebecca

[ruttie]

Isn't AZ. a non-recourse state?.

Edited November 19, 2010 by ruttie

[2ndTimeAround]

Hi,

Please call this number 512-961-6974 and get more financial information

Thanks,

Rebecca

Called this number - it is to a mortgage broker, trying to sell a VA loan........SPAM.........

[2ndTimeAround]

Isn't AZ. a non-recourse state?, meaning they cannot come after you for the difference in a foreclosure,only on a first mortgage? If I cannot keep up with my new loan modification & decide to let the home go into foreclosure, wouldn't they first have to send me a default notice, & then wait the 30 days before scheduling the trustee sale. I was told that in AZ. the trustee sale is 115 days after your 30 day default notice? Do they have to wait the 90 days after I miss my payment to send out a default notice?I am having just more than financial problems & probably will not keep this house anyways, I am just trying to see how much time I can actually & legally have.

When you signed your closing paperwork, what does it say???

Even though AZ is non-recourse state, a lender can generally seek a deficiency judgment after foreclosing on a property securing a loan, if the property does not sell for enough money to satisfy the debt in full.

Fortunately for most Arizona homeowners, AZ has adopted anti-deficiency statutes that preclude such recourse in many typical fact scenarios. In addition, the parties to a real estate contract may expressly agree that the lender's only recourse is foreclosure on the property itself.

If they do not do a deficiency judgment, then expect a 1099-C. Which is the difference of what the property sold for and what was originally owed, Then you have to claim exemption with Mortgage Debt Relief. Which generally allows taxpayers to exclude income from the discharge of debt on their principal residence. See IRS link http://www.irs.gov/individuals/article/0,,id=179414,00.html

In your case - I would check your closing documents when you signed for the loan, on what can and what can not happen after you default on your loan.

-

About your financial problems - do your self a favor. I want you to write down on a page. The left side all your your monthly bills and the right side all your monthly income. Then compare where is all the money going, and what can be cut.

I was at a friends house a few weeks ago that knows what I do. He asked me about a modification on his home loan. On his computer we listed his expenses each month, and then him and his wife's income. Come to find out most of their money was going to credit cards and he didn't need a mod. We worked out a plan to cut his credit card debt (by himself).

Last week I met with a Truck Driver that is 4 months down on his mortgage. After we listed all his expenses, we discovered his mortgage was not the cause of their problems. He was spending $800 a month for food.

Point - analyze where your money is going and coming from. Then make adjustments as much as you can.

Edited August 24, 2010 by 2ndTimeAround