Mortgage Modifications – Wells Fargo’s Modification Sweatshop
It is hard to understand why Wells Fargo, sometimes called “America’s Best Bank,” is one of the worst offenders in the mortgage crisis and one of the worst culprits of mortgage modification fraud. But, numbers don’t lie. With 17.7% of total servicing market share, and a $1.8 trillion (yes, Trillion with a “T”) servicing portfolio, Wells Fargo is making a lot of money handling delinquent loans and modification applications.
Mortgage modification specialists working at Wells Fargo’s loss mitigation office at 401 South Tryon Street in Charlotte, North Carolina, are under constant pressure to review, sign and notarize 10 to 11 “NEW” foreclosures each work day, or lose their jobs. These entry-level legal assistants are paid $30,700 to $53,300 a year and dubbed “corporate officers” with titles like “vice president,” “document processor,” or “loan process specialist.” The Department of Housing and Urban Development determined that these “document processors” had “signed the great majority of the judgment affidavits they review “without personal knowledge or otherwise verifying the data and information.” This is just the beginning of the robo-signing, dubious review practices, and incorrect math that comes out of the Wells Fargo mortgage servicing and loss mitigation areas of the bank.
Wells Fargo generates a whopping $3.1 billion of profit or about 16.4% of its total net income from its residential mortgage business and is by far the nation’s largest servicer of mortgage loans. Servicing loans is one of Wells Fargo’s most profitable businesses. While it’s hard to determine from Wells Fargo’s Annual Report, it appears that a substantial part of their mortgage business revenue comes from servicing activity, as opposed to the traditional business of making new loans. Wells Fargo is also a leader in re-finance activity. Sadly, their loss mitigation efforts do not stand out. Why is that? Perhaps the profitability of the mortgage servicing business creates a perverse incentive to fail to modify, delay, overcharge, and otherwise act contrary to the homeowner’s best interests.
- Legal fees, late charges, back interest, home inspection fees, and maintenance are calculated by “copying and pasting” from a third-party vendor software system called LPS, without checking the data (LPS was cited by federal regulators in April, 2011 and sued by the Nevada Attorney General’s Office for forging documents and gross inflamation of amounts owed);
- Loan processor specialists verify ownership by reviewing scanned images, and sign notarized affidavits that Judges like Arthur Schack in Brooklyn rely on in approving foreclosures, but the accuracy of the review often misses the mark;
- One legal process stated that when asked if she could explain to a judge how she had obtained “personal knowledge, information and belief” that the documents were accurate, she said, “I wouldn’t even feel comfortable answering that question.”;
- Modifications receive only cursory reviews;
- Fax machines where modification packages arrive are left unattended for weeks; and
- Employees processing 10 to 11 “NEW” foreclosures a day focus on “quotas” and speed, and are not compensated for being accurate or thorough.
These practices are endemic of an industry that has let consumers down and led homeowners through a byzantine struggle reminiscent of a Greek epic poem, where modification applications are submitted, re-submitted, lost, overlooked, submitted again, ad infinitum, and where homeowners cannot understand where they stand with the bank, despite their best efforts to settle up. Most delinquent homeowners want to modify or settle and pay a reasonable rate, and save their home. Almost none want to go on year-after-year waiting for an answer that never comes, but it is hard to know what to do and to not feel cheated with practices like those described above and statistics like these:
- The National Consumer Law Center surveyed foreclosure cases, including those from Wells Fargo, finding homeowners were overcharged in 4 out of 5 cases.
- The San Francisco assessor’s office surveyed 382 foreclosure cases and found “irregularities” in 99 percent of the loans and “clear violations of law” in 84 percent of the loans.
Inside the Foreclosure Factory, They’re Working Overtime, CNBC.com, 19 Apr, 2012. John W. Schoen. http://www.nbcnews.com/business/inside-foreclosure-factory-theyre-working-overtime-723653
Wells Fargo is America’s Best Bank, Daily Beast, 11 Jan 2013, Matthew Zetlin. http://www.thedailybeast.com/articles/2013/01/11/wells-fargo-is-america-s-best-bank.html
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