Wells Fargo Loan Modification Problems and Solutions

One homeowner fell behind on her mortgage when she sustained a work injury that caused medical bills totaling over $30,000. On her own, she applied for a loan modification with Wells Fargo (or she thought she did). She filled out the paperwork and, after 30-days, she received a call from her Single Point of Contact who told her she was approved for a trial modification plan. The representative did not send her any agreement in writing but told her verbally over the phone the amount of payments she needed to start making and their due dates. She was told over the phone that foreclosure activity was stopped.

Happily, the homeowner sent her payments in per the Single Point of Contact’s instructions. She sent in two payments which were accepted and cashed by Wells Fargo. Prior to sending her third and final payment, she received a Notice of Default taped to her door issued by Wells Fargo. Meaning, Wells Fargo moved forward with the foreclosure process despite everything she was told. The Notice detailed her missed payments and showed no record of any agreement between herself and Wells Fargo. Additionally, the accounting Wells Fargo provided showed no record of any payments made despite her having two checks cashed by the bank over the last 60-days.

She immediately called the bank to clarify this error. When she called, she was told that her Single Point of Contact had changed and that there was no record of any approval on a modification request. Most frighteningly, they told her they showed no record of any loan modification review having taken place. Even more scary than that, she was told that there was no record of any conversations between herself and the bank. According to Wells Fargo, this was the first time she’d spoken with them.

Upon hearing this, she was persistent and she got herself to a supervisor who assured her that they would look into it and get back to her within 48 hours. She was told by the supervisor that he believed her and would “do everything he could to get to the bottom of this.” He led her to believe that he was serious by verifying her contact information, asking her what the best time for him to call her back was and reading back her email and phone number to ensure he’d copied it down correctly. He gave her his name and employee ID number as well as a direct phone number so she could call him back if she needed anything. She never received a call back.

After the 48 hours had passed, she called the direct number, was routed to a front end representative that told her Wells Fargo didn’t have any record of her calls or conversation with the supervisor. When she read the employee ID number given, she was told that that particular person did not work in the loss mitigation department and could not help her.

Feeling completely lied to, helpless and alone – she finally reached out for help. It took us a full 3 months to resolve the issue. We had to enlist the help of the in-State trustee and threaten a full blown lawsuit based on all the bad faith communication. It was a battle but we eventually won. We got the foreclosure postponed, applied for a new modification (this time with me keeping tabs on everything that was happening), made it through a new trial payment plan and got a permanent modification.

She saved her home but we never could locate the two payments she made. Wells Fargo denied ever receiving them despite the proof we had. The homeowner did not have the resources nor the desire to file a lawsuit over these two payments so she chose to move on. While we saved the home, she lost those payments – they are still somewhere in Wells Fargo’s system, unaccounted for and essentially…lost inside Wells Fargo’s personal bank accounts.

One couple fell behind on their mortgage when their family business went under. They missed 3 mortgage payments due to the fallout of their business’ failure. Fortunately, they were able to quickly pivot and re-open a new business that picked up speed and was profitable after a few months. Once they had money coming back into their bank account, they started the application process with Wells Fargo when they were 3 months behind. They were facing foreclosure but were able to resume making mortgage payments.

They spent 65 days going through document collection with Wells Fargo. At the end of the process, Wells Fargo issued a denial. They were told that the reason they were denied was because their tax return from the most recent year showed that their business was unprofitable. Wells Fargo thought they had a non profitable business and could not support the payments. They told the representative that yes – that is what the tax return showed but that their new business was currently generating more than enough money to qualify them. Their Single Point of Contact told them “no problem.” They were instructed to appeal the denial  by writing a letter explaining that Wells Fargo should not rely on the tax return from the past year but on the current income they had coming in.

They submitted bank statements, deposit receipts, and a profit and loss statement to substantiate their current income. They sent everything in and assumed they had an open appeal. Being busy with their business, they didn’t call to check on anything and assumed the bank would get back to them once they’d reviewed the appeal. They never heard back from Wells Fargo.

After 45-days, they called back and were told that there was no open appeal. They were told that, in order to be reviewed, they would have to start the loan modification process over again and go all the way back through review. They didn’t have another 65-days to spend going back through review as their home was facing foreclosure. They didn’t know what to do. They called for help at this time.

We were able to file for Mediation in the State of Washington, bring the bank to the table and re-open the appeal. We got them reviewed with the correct income from their current business and saved the home.

Wells Fargo says a lot of things that aren’t true and has several procedures that are borderline illegal, if not completely illegal. I’ve listed the main ones below so you can prepare yourself for their tactics:

• The 30-day timeline for a “decision”: If you are in any sort of open loss mitigation review with Wells Fargo, they will tell you that you will have a decision within 30-days. This is not true. What they mean is, they will issue some sort of response to you within 30-days. If that response is that the package is incomplete or they need something additional or they have a question, they will not do anything on the file until the question is answered. So, what they’re really telling you is – they will have some sort of response for you within 30-days but not necessarily a decision. If you wait to hear from them for the full 30-days, it is possible that they will just delay you right into foreclosure. I have seen them mess with homeowners by issuing one question at a time every 30-days until they push you right up against your auction date. Then, they say there isn’t enough time to help you. Essentially, they’re using the word “decision” incorrectly. What they mean is – they will have a response to you within 30-days. If the response is that they need something else, they will continue this never-ending cycle until it is too late for any application to go through. If you have been told that you’ll have a decision in 30-days, you need to call them every other day and ask if there are any updates so you catch any additional items needed as soon as they come up.
• “Your file is complete, nothing else is needed”: Wells Fargo will tell you that your file is complete and the way they speak to you will make it sound like you can just relax and they will get back in touch with you if anything else is needed. They say things like “Yeah! You’re good to go! We don’t need anything else right now!.” Just because your file is complete doesn’t mean that it will continue to be complete. At any point, an underwriter can decide that they don’t have enough information or that they have an additional question. They will go into the system and change the file’s status from complete to incomplete. They don’t call or email you when this happens. What they do is mail you a letter almost 15-days after the file was marked incomplete. Don’t wait on the letter and do not rely on any information about the file’s complete status. Even if you are told that your file is complete, call in every couple days to ensure it is remaining complete. A complete file does not ensure that it will remain complete. Don’t trust them to tell you if something changes.
• Customer Service representatives will pretend that they have access to the loss mitigation notes even though they don’t: If you call in to Wells Fargo’s customer service department and ask for an update on your loan modification, chances are they will tell you to hold and then give you an update. Sometimes, they even tell you that they are reading the notes on the account while you hold. What’s important to understand is that there are two departments at Wells Fargo – the general customer service department and the loss mitigation department. If you end up calling general customer service, they will give you an “update” as best they can but they don’t have access to the loss mitigation notes. So, if you’re in any sort of review for a modification, repayment plan, short sale or deed in lieu – they literally can’t see what’s going on with your file. Instead of honestly telling you they don’t know and then sending you to the right department, they may just tell you an update. And the worst part is – it’s generally a positive update. They do this to be comforting, get you off the phone quickly, make you feel like everything is fine while your file may or may not actually be doing okay. You can protect yourself here by asking what department you’re in when someone answers and refusing to hear an update from anyone who is not in the loss mitigation department. Be prepared for them to push back on you and tell you that they can see your notes and that it’s fine for them to help you but be firm – get yourself to the loss mitigation department and don’t take no for an answer.
  • I had a client receive information from a general customer service representative that she was approved for a loan modification. The actual note said that one of the first steps in the modification process (the income verification) had been approved. This is not the same as approval on the actual modification. The general customer service representative just saw the word approved, had no knowledge of what was actually going on, and told the client she was approved. The client found out 3 weeks later that not only was she not approved but the file was actually incomplete and the bank was waiting on additional documents from her. 
• Asking you to sign away your right to representation: As a homeowner, you have a right to be represented by an attorney. Any attorney you work with will send in a written Authorization form telling Wells Fargo that you’re represented and that communication should be directed to the attorney. It is illegal for Wells Fargo to refuse to talk to your attorney once they get this form. But, because they don’t want to deal with your attorney (as they believe homeowners are easier to manipulate), they will send you a form like the example listed below. Homeowners get this after their attorney has authorized themselves. This form is Wells Fargo’s way of asking you to sign off and give permission for them to continue to talk to you directly instead of talking to your attorney. They are the only bank that still tries to circumvent your representation even after you tell them in writing that you want to use an attorney. Many confused homeowners don’t know what this is. They sign this and then unintentionally allow Wells Fargo to not have to inform the attorney about what’s going on. It’s underhanded, sneaky and corrupt for them to send this form after they’ve been notified that a homeowner has representation.

The bad news is that our regulatory system in this country is broken and there really isn’t any way to fix the systemic problems within Wells Fargo without increased government regulation and some serious consequences for the bank when they continue to violate the law. Being sued and called out for fraudulent activities over the last few years hasn’t done much to curb their illegal activities. It seems they are too big to regulate and stepping on homeowners’ rights doesn’t matter to them. They have enough money to keep paying their fines and it seems this will continue for the foreseeable future.

Knowledge is power and you may have some rights in your particular state to fight the bank. Most states have some sort of Mediation procedure that can bring Wells Fargo to the table and hold off foreclosure while you have an attorney fight them on your behalf. In Washington, Wells Fargo is one of the lenders that is required to attend Mediation. I have personally battled with them in many capacities for years. Success is possible if you know your rights and have an advocate that has time to deal with them on a daily basis. Beating Wells Fargo and getting them to do what they’re supposed to do all comes down to persistence and a refusal to accept anything they tell you without written documentation to support their claims. It is possible to hold them accountable. Hard, but possible.