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Jon Lewis
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Wells Fargo makes Ridiculous Decision

2 comments

So, here we go again.  Real Estate agent gets a deal done on a home, and unfortunately, the seller did not realize she owed $15,000 more on the loan than she did.  As a result, the deal cannot go through unless Wells Fargo approves a short sale.  The short sale process can take forever, and the buyers won’t wait.

Wells FargoSince I know the agent, I offered to help a little.  I found Wells Fargo’s General Counsel’s e-mail (James Strother – james.strother@wellsfargo.com), and I sent him an e-mail regarding the matter and asked if there is any way to escalate the process.  He immediately had Ms. Gwen Oberg contact me, and I put her in touch with the agent.

Seemingly, Wells Fargo was interested in getting this deal done.  Why?  If not, the seller would either have to file bankruptcy or just let the house go into foreclosure.  She was selling because she is divorced and having financial difficulties. If that were to happen, Wells Fargo would have to pay thousands in attorney fees, maintenance on the house, real estate commissions, and probably get less money for the home given that it would be known it was in foreclosure.  It could mean anywhere from $50,000-$100,000 loss for Wells Fargo AND the investors.

However, Ms. Oberg and her associate, Jeremy Turner, continued to say that they had to have the “Investors” approval of the short sale.  Today, the real estate agent gets an e-mail that the investor turned down the short sale since the house was not on the market for 5 days including a weekend (it sold in 4 days).  The investor is Freddie Mac.

So, the question is:  why would Freddie Mac and/or Wells Fargo prefer to lose $50,000-$100,000 rather than $15,000 and, in addition, force a woman to either file bankruptcy or go into foreclosure?  I can’t answer this question, and really, I don’t think anyone could devise a logical answer.

2 Comments

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  1. Insider says:
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    Good afternoon,

    From the tone of your article and y our comments and use of “” marks around certain words, it appears as though you feel like it’s all made up and the bank does not need investor approval to complete a chort sale, and the bank would rather sit back and laugh while the home goes into FCL?

    Your assumption is flawed. Any servicer, not just banks, or WF, require investor approval to complete a loss mitigation workout, whether it be short said, deed in Lieu, loan mod, etc etc etc. The investor owns the debt, not the servicer. You should understand that if you’re at this stage of the game. It’s irresponsible to write such articles and make such assumptions to readers who are less informed.

    I assure you the bank does not want a single FCL on its books…not one. You’re right, it will lose $$$ on a foreclosure, 100% of the time. But, it cant sinply say we will operate outside the terms of our agreement with the investor of the debt simply b/c you don’t agree with the investors decision.

    It’s likely that FHLMC views this home which sold in as you stated, 4 days, to be of a certain value. And if it sold in 4 days originally, it will see again for the correct price long before it goes into foreclosure. What you need to understand is the must be strict guidelines to follow because there are a lot of scam artist out there who will push a short sale through for 75% of the value of the home, and then turn around and sell the properpty right back to the original owner for a small profit. Both parties have just committed fraud and taken advantage of the bank/servicer/investor. Especially when a property sells in 4 days it’s a red flag that the transaction may not have been arms length and already pre-arranged ahead of time. Just saying.

  2. Terrie says:
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    Wells will not lose money on this – they already collected insurance on the mortgage of most likely 50% of the value of the mortgage -and foreclosures only cost them approx 40K – they will make money on this – do the math