3 Different Letters From Wells Fargo: Trial, Denial, and Foreberance
My parents have been working with Wells Fargo to try to get a loan mod for over a year. At the same time, they have been showing the house for short sale. Wells has drug out and denied several good offers on the short sale. The house is now worth much less than the original offer they declined by $10K. Wells has really shorted themselves and caused my parents a lot of undue stress and extra work. My father has Huntington's and my Mom is Diabetic. They are retired.
After resubmitting loan mod application and paperwork again (they have resubmitted paperwork and application several times), they recently received 3 different letters in the same day: 1) Denial of HAMP stating that they don't qualify because they can't make a payment of below 31% of their gross income and stay within the program requirements, 2) Acceptance of Loan Mod with Trial Payment of about $1,600/mo, 3) Offer of Special Forbearance Plan.
My Mom called Wells for an explanation and they basically stated that they would not be able to tell them anything about the actual permanent plan until after their trial period. They also couldn't say whether the permanent payment would be higher, lower, or the same. From what I am reading on this blog, it sounds like they may have to make payments for 3-9 mos before they will even know. SO what that tells me is they would possibly have to pony up $15K just to be denied. Seems ridiculous to me. If Wells forecloses and sells they will probably net (if they're lucky) $160K out of $175K gross. They turned down an offer for $190K on a short sale. The original purchase was $305K.
The thing that amazes me is that the banks won't do one of 2 things that would make a HUGE difference: 1) Keep the principle as-is, but reduce the interest to 1% or 2% that would make the permanent payment affordable while keeping the principal. OR 2) Reduce the principal to to market value and roll in the past due payments into a new 30yr loan.
Why did they receive three different letters, and what do the letters mean?
My parents have a rental house that they can move into if they lose their house. They have little reason to put up to $15K on the chance that their mod is approved. Especially after all of the problems they have had with Wells in the process while trying to do the right thing. They would have been better off walking from the house a year ago.
Wells Fargo Mortgage Loan Modification Answer:
by Wells Fargo Mortgage Loan Modification Expert - Dan North
Wow, that does sound crazy. Here is my take on the letters which may be from multiple application files running at the same time or someone really is trying to help any way they can from different departments or heaven forbid Wells Fargo has a mad house in their Loss Mitigation Department. (My vote is on the last but I can be a bit cynical)
Wells Fargo Letter 1 Is A Falsehood
Per HAMP Guidelines you can go below the 31% of gross monthly income but this is at the sole discretion of Wells Fargo. If there current monthly mortgage payment is already bellow 31% or gross monthly income before modification then they would not qualify by HAMP Guidelines
Wells Fargo Letter 2 May Or May Not Be Approvable
This is impossible to say with out running your own NPV Test
(Net Present Value Test). This is the final test Wells Fargo runs to see what they will approve. The download is the government model off of the FDIC website but Wells Fargo uses their own modified test which is approved by Fannie Mae. They should be similar results. Try running different numbers until you come up with $1600/month.
You may want to get a local Wells Fargo approved appraiser to do an appraisal of the house. Wells Fargo may be using a price that is much higher than the actual worth of the home and this will change the results drastically.
You should also look at shopping your Homeowners Insurance to lower cost since this will be escrowed into the mortgage payment. If your parents are in California I recommend Daniel Fraisse Insurance
highly and use him exclusively in California, Arizona and Florida. He can usually find a carrier to lower costs.
Wells Fargo Letter 3 Is No Real Help
If your parents are retired on a fixed income why even offer a forbearance? This would extend the time they stay in the house while trying to short sell but is not a solution to keep the house. The mortgage payment would go back up and possibly even have a repayment plan that would increase the later payments.Return to top of pageClick here to post comments.Return to Mortgage-Loan-Modification-Answers Home page from 3 Different Letters From Wells Fargo: Trial, Denial, and ForbearanceApply for No-Upfront Fee Hardship Loan Modification
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