Wells Fargo Computer Glitch Blamed as Hundreds Lose Their Homes

CBS News | December 4, 2018 Wells Fargo says a computer glitch is partly to blame for an error affecting an estimated 545 customers who lost their homes. The giant bank filed papers with the Securities and Exchange Commission last month, revealing it incorrectly denied 870 loan modification requests. About 60 percent of those homeowners went into foreclosure. Read more here.

Wells Fargo Plans to Refund Some Mortgage Customers

April 13, 2018 | USA Today        Wells Fargo outlined plans Wednesday to refund customers who were charged extra fees to extend rate locks on mortgages because of delays that were caused by the bank, not the customers.

The San Francisco-based bank, which is still working to repair its reputation following last year's fake account scandal, said it will refund customers who paid fees to extend interest rate locks between Sept. 16, 2013, through Feb. 28, 2017 but "who believe they shouldn't have paid those fees."

In a rate lock, the lender guarantees that it will provide the borrower with a mortgage at a specific rate, say 4%, for a specific time period, such as 60 days. There is often a charge to extend the rate-lock period.

In the Wells Fargo case, borrowers were hit with additional fees for allegedly getting their loan paperwork in late. But the bank, after a review of its rate-lock fee policies, acknowledged that the delays in some cases were caused on its end.

In a statement, the bank said its rate-lock extension policy put in place in September 2013 was "at times, not consistently applied, resulting in some borrowers being charged fees in cases where the company was primarily responsible for the delays that made the extensions necessary."

Effective March 1, 2017, Wells Fargo changed how the company manages the mortgage rate-lock extension process.

The company said it would reach out to customers and start issuing refunds in the final months of this year.

While roughly $98 million in rate-lock fees were assessed to about 110,000 loan applicants in the nearly two-and-a-half-year period in question, the company believes a "substantial number" of those fees were "appropriately charged."

As a result, Wells Fargo said "the amount ultimately refunded likely will be lower, as not all of the fees assessed were actually paid and some fees already have been refunded."

The move was the latest attempt by the bank to rebuild trust with customers, its CEO Tim Sloan said in a statement.

"We want to serve our customers as they would expect to be served, and are initiating these refunds as part of our ongoing efforts to rebuild trust," Sloan said.

New Wells Fargo Scandal Over Modifying Mortgages Without Authorization

CNN | June 15, 2017          Christopher and Allison Cotton had 16 years remaining on their mortgage when family medical expenses forced them into bankruptcy in 2014.

Wells Fargo went ahead and modified the North Carolina couple's mortgage several times without their authorization, according to a class action lawsuit. The bank extended the term of the mortgage by nearly 26 years, documents say.

If the "stealth" modifications hadn't been caught, the Cotton family's total interest payments would have nearly tripled to more than $140,000, the lawsuit said.

"I anticipate Wells Fargo has done this to thousands of customers," said Theodore Bartholow III, a lawyer who represents the Cottons and last week launched the class action.

News of the latest legal trouble facing Wells Fargo (WFC) was first reported by The New York Times. It comes as Wells Fargo continues to dig out of a scandal over unauthorized account openings and alleged worker retaliation.

Bartholow described an "insidious" process where Wells Fargo uses a routine, but little-noticed form to "sneak through" mortgage modifications on unsuspecting homeowners.  Read more here.

Bank Forecloses on 'Extreme Makeover' Homeowner

USA Today | May 26, 2017         HOLT, Mich. — Nearly nine years after her home was rebuilt on national television, Arlene Nickless must turn in her keys.

Designers with ABC’s Extreme Makeover: Home Edition — with the help of hundreds of volunteers — built her family's home in 2008 following the death of Tim Nickless, her husband of 18 years. But Arlene Nickless has been struggling to manage the mortgage for years and must leave by Monday.

The home was foreclosed on in September and has been up for auction online for weeks.

This past Sunday, cardboard boxes were stacked on the dark hardwood floors once showcased in nationwide broadcasts. The 2009 Ford Flex given with the home sat in the driveway hooked to a moving trailer.

And the overwhelming feeling a tearful Arlene Nickless had all those years ago took on a different tenor.

“When I stepped out of the house the day Extreme Makeover came, you will see me say ‘I can’t believe this is happening,’ ” she said. “And, truthfully, that’s what I feel right now: I can’t believe this is happening.”

Arlene Nickless is quick to defend the ABC show, whose lavish rebuilds have in some cases led to foreclosure because of increased property taxes and pricey utilities. She's less complimentary of her mortgage servicer that state regulators now are targeting.

Her home’s foreclosure resulted from an ongoing struggle to manage the property’s pre-makeover mortgage — a balance that rested at about $30,000 after the 2008 makeover, but had ballooned to at least $113,000 by the end of 2016, she said.  Read more here.

Foreclosure Tragedy Can’t Compete with Ryan Lochte

The Huffington Post | August 19, 2016    Foreclosures are no longer fodder for major news headlines. The media intensity diminished as Americans became dulled to the stories of millions of families being kicked out of their homes by big banks and Wall Street-backed hedge funds. Instead, the media whips up a frenzy over Ryan Lochte and his pals vandalizing a bathroom in Rio de Janeiro. Yet, out of the media spotlight, our fellow Americans continue to be foreclosed out of their homes.

Kathleen Gross and her family will lose their Paradise Valley, Arizona home of twenty-five years to foreclosure next Tuesday, August 23. This will mark the end of a relentless years-long battle with a series of mortgage companies. “All of our memories are here. We raised our children in this home,” she wept. “We have been in this neighborhood for over two decades and don’t want to leave.”  Read more here.

JPMorgan Getting Back in the RMBS Game

New securities would be bank's first “house transaction” since the financial crisis

The Real Deal |  March 16, 2016     JPMorgan Chase is dipping back into the mortgage-backed securities market in the banking giant’s first “house transaction” since the financial crisis.

JPMorgan is expected to price a new residential mortgage-backed securities deal, which would pass along most of the credit risk on $1.9 billion in mortgages owned by the bank, over the next two weeks. JPMorgan would hold 90 percent of the deal, keeping the most senior tranches, while selling off riskier pieces to investors.

The deal would be JPMorgan’s first “house transaction,” entirely backed by mortgages it owns, since the financial crisis, according to the Wall Street Journal. The pool backing the securities includes a mix of more than 6,000 mortgages, around 75 percent of which conform with Fannie Mae and Freddie Mac underwriting standards.  Read more here.

J.P. Morgan Readies Mortgage-Backed Deal

Deal is J.P. Morgan’s first since the financial crisis involving mortgages entirely owned by the bank

Wall Street Journal | March 14, 2016   J.P. Morgan Chase & Co. is trying to sell new securities that would pass along most of the credit risk on $1.9 billion in mortgages, in an attempt to revive a debt market that has been largely left to the government since the financial crisis.

The largest U.S. bank by assets is expected to price the residential mortgage-backed deal over the next two weeks. J.P. Morgan would hold 90% of the deal by keeping the safest parts, or the most senior tranches, and plans to sell off the riskier pieces to investors.

Banks issued trillions of dollars worth of bonds backed by home loans in the years before the financial crisis but have had trouble winning over investors burned when the market crashed. Financial institutions issued $61.6 billion in private mortgage bonds in 2015, up from $54.1 billion in 2014 but a fraction of the $1.19 trillion issued at the peak of the housing boom in 2005, according to data from trade publication Inside Mortgage Finance.

Government-sponsored entities Fannie Mae and Freddie Mac have dominated the market in their absence. The two companies have recently been selling new securities that use derivatives to unload the risk of default on the mortgages they guarantee.

The new deal is J.P. Morgan’s first “house transaction” since the financial crisis, meaning it is entirely backed by mortgages the bank owns. The pool includes a mix of more than 6,000 mortgages, both newer and refinancings, around 75% of them conforming with the underwriting standards set by Fannie and Freddie. Most of the mortgages are made to individuals with high credit scores.  Read more here.

Voices: For Some, Foreclosure Means Free Housing

USA Today - Opinion | January 4, 2016    LAS VEGAS -- I used to think of foreclosure as chillingly final. Then I visited this city, where the slow unspooling of the great housing crash of 2007-2009 is affording free shelter to tens of thousands of people.  Most are living in homes they technically still own, but on which they haven’t made a mortgage payment in months or years; others are squatting illegally in homes that were abandoned by owners who defaulted on mortgages.  These homes are in real estate limbo — in foreclosure, but not actually foreclosed — because many lenders are taking their time completing the process that eventually leads to repossession and resale.  Read more here

Repossessions Spike 66% as Foreclosure Crisis Lingers

CNBC.com |  October 15, 2015    New foreclosures may be back to nearly normal, but the mess from the epic housing disaster in the last decade is far from gone. Bank repossessions, the final stage of the foreclosure process, jumped 66 percent year over year in the third quarter of this year, according to RealtyTrac, a foreclosure sales and analytics company.  Read more here