The Wells Fargo Wagon Keeps on Rolling

Once upon a time, as little Ronnie Howard and the future Mrs. Partridge show, Wells Fargo coming to town was news to sing about.

It was also loud and open. Something that hasn’t been the case with anything Wells Fargo has done in recent memory.  In 2016 the news was that tellers and other Wells bank branch employees were opening accounts in customers’ names without customer authorization in order to meet new account quotas and to receive bonuses. 

Now, Wells Fargo is at it again.

The New York Times reported yesterday that Wells has been  doing something similar with home mortgages,  it has been putting borrowers into unauthorized loan modifications.

That is, if someone was behind on their mortgage (and in some cases, even if they were not behind), Wells restructured the terms of the mortgage without permission of the homeowner.

They can’t do that!  A contract is a contract—if you signed up for a 30 year mortgage with a fixed interest rate of 4%, that’s what you get.

But Wells’ tactics included adding years to the loan payoff period (extending some loans out to a 40 year payoff).  That lowered the monthly mortgage payment (sounds good, right?) but if the borrower was repaying their mortgage and any missed payments through a Chapter 13 bankruptcy plan, that could mess everything up as those plans are based on income and amount of monthly expenses.

Lowering someone’s mortgage payment from $1500 to $1150 could force that homeowner out of their bankruptcy plan—and into foreclosure.  Not exactly out of the frying pan, but definitely into the fire.

Why would Wells bother?  The only logical motivation- profit.  The government provides incentives to lenders who modify mortgages (a program put in place to encourage lenders to quickly modify the glut of borrowers who went into default after the economy crashed in 2008-2009).  The Times reports that Wells may get up to $1600 per modified mortgage, plus all the extra interest that would be paid over the years that are added to the loan terms.

It should be noted that a possible warning sign that this has or may occur is a letter from Wells Fargo informing the customer that their “loans are seriously delinquent” while offering them a ‘trial loan modification’ with the admonition that “Time is of the essence. Act now to avoid foreclosure.”

I haven’t seen one of these ‘phantom’ modifications yet.  Let me know if you think it has happened to you.

2015: The Year in Themes

It’s been quite a year, in court, out of court, blogging, talking, consulting. Since I started putting my thoughts down early in the year a few themes have emerged, themes I’m sure I’ll continue to follow into 2016.

Looking forward to 2016 and many more posts. Happy New Year, and thanks for being a reader.

U.S. Grant and Crushing Debt

A story from a friend of mine from his law school days – just another reminder that your financial condition today neither defines you or your future.

December 1991, I came out of New York Law School at 11:30 pm after a five hour Constitutional Law final. Cold, windy, raw, the World Trade Tower looming a few blocks away- I thought it ugly then, miss it now – the Commerce Clause ricocheting around my head like shrapnel in a tank (to the same effect), I did not have it in me to hike over to City Hall and the Lexington Avenue Express to Grand Central. Alone on the corner of Church and Worth, I flagged down a cab, jumped in, skipped eye contact with the driver, an average looking black guy who gave me a surprising, pleasant ‘Hello, where to?’

I responded with a mumbled, “Grand Central, don’t take Park”, nestled into the corner, eschewed the seatbelt, pulled my bag tight to my side, closed one eye, kept the other half opened to insure he did indeed stay away from Park. Took a bump on Sixth that forced me to open both eyes, I scanned the glass divider, taped to it behind the driver was this picture of Grant.

grantI looked at it, stared at it, held my curiosity for half a block before asking, “Why do you have a picture of Ulysses S. Grant on the glass.”

“Ah, you know him,” he sounded surprised – which, if you dwell on it, is perhaps a bit disturbing.

“Of course,” I answered, but not in that tone reserved for cab drivers who insist on engaging in conversation at exactly the moment you are in no mood to talk to anyone, never mind the stranger driving you the long way to your destination, “so why his picture?”

“I just turned forty,” he announced, and I knew at once where this was going, sat up, “and I’m driving a cab, trying to finish school, kinda’ the loser’s track, you know? So, I put that photo there to remind me that when Grant was forty he was bankrupt, lived with his wife and kids in his father-in-law’s house, worked as a clerk in a feed store . . . . talk about losers. . . eight years later he was President of the United States . . . . that’s it, man, nothing’s ever over.”

Just saying …