Customer Lost Home by Using Wells Fargo Mortgage

December 17, 2014 at 3:57 pm Leave a comment

This story is a telling one about why you should think twice before considering Wells Fargo to handle your next mortgage loan.

A recent client of mine was excited to close escrow on her first home on December 5, 2014.  Contrary to my recommendation, her choice to handle her home loan was a loan consultant with Wells Fargo dubbed as “MN”, whom she met at a Mesa or Gilbert branch of the bank while processing another  transaction.

I was told by MN that my client was well qualified to purchase a home and there were NO red flags to worry about in getting her the loan.

During the loan process, my client frequented the branch office to deliver documents and sign paperwork to help speed the transaction to what all thought would be a successful closing. The loan officer assured me that we were on track to close escrow on time for my client.

Issues arose when the due date for delivering loan documents to the title company came and the Wells Fargo’s loan documents were not complete. The loan officer was not easy to track down to explain why. He later returned my emails and phone calls by saying, “We are waiting for the employer of the borrower to change their verification of income because it doesn’t match the W2.”

Apparently, the loan consultant accounted for bonuses and overtime pay when qualifying my client for the loan, but her actual work salary showed a lower amount. If the verification of employment salary remained the same, my client would no longer be qualified for a conventional loan and she would have to change her loan application to an FHA loan, which would take another two to three weeks to process.

It was later ruled that the document Wells Fargo was asking for was not obtainable. Wells Fargo denied my client the loan. She didn’t get the house. As a result, she was out nearly $1,000 for the cost of inspection and appraisal and I was left to fight to get her earnest money returned while the loan consultatn MN was out looking for his next customer.

There are many questions to be answered and lessons to be learned in this story. Wells Fargo, with the help of MN’s.  supervisor, didn’t detail how they got into this situation – nor will they admit to any error.

Questions:

  1. Why was Wells Fargo asking for verification of employment (VOE) on the very day that loan documents were due to Title? Someone wasn’t paying attention to the deadlines and didn’t address these issues earlier, in a timely fashion.
  2. Why did Wells Fargo miscalculate my client’s income? Did they miss asking her specific questions that should have been asked? Income verification is a basic requirement to start the loan process – any experienced loan officer and their supervisor would have figured this out.
  3. Does Wells Fargo provide adequate training to their loan officers? They have plenty of mortgage consultants and each one is different. You can get one who is a seasoned loan officer, to one who is incompetent as my client seems to have located.
  4. How closely does Wells Fargo manage and help their numerous loan officers in closing on loans? Apparently, in this case, help came too late. The bank loan officer’s error resulted in my client not getting a house, wasted time and money for both my client and myself, including my client losing nearly $1,000 on inspection and appraisal costs. I also got zero consideration for work done to bring a home’s closing to near-completion.
  5. Why was my client denied the same loan for which she was originally approved?

Big banks like Wells Fargo, though household names, don’t necessarily employ the best people in the mortgage business. In my many years in real estate, I have more bad experiences with big banks than with small mortgage companies.

Big banks have layers of authorization and policies that delay the process of your loan. In most cases, your loan application sits at the end of what must look like a factory conveyor belt, waiting for its turn. If things go wrong, there is no one to expedite your loan and close it on time. You risk losing your earnest money and not getting the house wanted so badly to purchase.

Wells Fargo doesn’t disclose financial information about clients to the buyer’s Realtor that could help close the deal. If the buyer is related to the Realtor, they need to provide an exception.

A complete investigation of this transaction is deserving to avoid similar fiascos in the future by Wells Fargo.

A lender and loan officer/consultant are key in closing a loan transaction. If the buyer doesn’t close on time, the buyer risks losing his or her earnest money and also risks losing the house.

It is important to find a loan officer who has a strong track record of closing on time, and being honest and knowledgeable. Consult me or your own trusted Realtor for recommendations, as we come across loan officers and lenders all the time and have experience with ones who gets results.

 

Entry filed under: Arizona Real Estate, Chandler Real Estate, Phoenix Real Estate, Real Estate Deals. Tags: , , , .

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