'Blacklisted' by Wells Fargo for 'Flipping'?

[Ibrahim Hughes]

As a realtor I'm representing an investor friend of mine who had an accepted offer on a short sale property where the lender is Wells Fargo.

The offer didn't get approved, despite it being for asking price and the buyer placing $20k in escrow, because his LLC was identified as one that the lender considers a "flipper"?

I've never heard of this before, has anyone else? I haven't seen the email which was sent to his attorney by the bank. Additionally, the seller's lawyer claims the buyer is "Blacklisted" by Wells Fargo. The only thing my friend can think of is that he did close on a property last week with the same LLC where it was a short sale with WF as the lender. But he closed successfully.

WTH?! Smh.......

[Brian Burke]

I know that not long ago, WF wouldn't finance the buyers of my flips. If I received an offer from a buyer with a WF pre-approval letter I'd ask them to switch lenders or I'd reject the offer. They simply refused to do the loan if the house was owned for less than 90 days. I don't know if this is still true (haven't had a WF buyer lately for some reason) but it sure seems that WF has something against flipping!!

[Dean Letfus]

Makes sense NOT. Banks need to shift inventory so black list the very people that can help them??

[Joel Owens]

Yes I have heard of this awhile back. Can your friend not have someone else buy it and partner or some other arrangement??

Is your friend buying to rent out or trying to assign or other strategy. If he gets blacklisted that is bad news.

[Ibrahim Hughes]

Originally posted by Dean Letfus:

Makes sense NOT. Banks need to shift inventory so black list the very people that can help them??

And the "very people" who helped them last week (remember they closed on a WF short sale last week!) ???

[Ibrahim Hughes]

Originally posted by Joel Owens:

Yes I have heard of this awhile back. Can your friend not have someone else buy it and partner or some other arrangement??

Is your friend buying to rent out or trying to assign or other strategy. If he gets blacklisted that is bad news.

He doesn't assign any of his deals. He's a straight rehabber who buys with cash. He will likely try a new LLC and attorney.

You've heard about WF doing this in the past to Investors Joel?

[Joel Owens]

I need to point out that I can't remember the particulars of the blacklisting that happened awhile back.

Maybe they reviewed the short sale file after closing and didn't like something your friend had done in the transaction. Sometimes internally they will flag things for review.

[Joel Owens]

Not Wells Fargo specifically but I did hear about this before from some other brokers on an agents board I used to frequent.

I can't remember the minute details because it has been so long ago. Upon audit of a short sale I have seen where a bank reverses a short sale approval as well.

[Ibrahim Hughes]

Joel Owens - After your post I suddenly remembered that the property my buyer purchased was from a wholesaler. Gave him a call and sure enough it was via an assignment. Looks like he may have gotten flagged and his great deal 2-3 weeks ago killed this deal.

[Wayne Brooks]

Ibraham,
That is odd. Odd only because when you get a short sale approval from a lender, includin WF, it is for a specific buyer. There generally is no way to assign it. Are you sure he didn't do a double close, and maybe thinks it was an assignment.

[John Mireles]

Is it possible that he took out an owner-occupied loan at some point but then used it to flip a property instead? Don't know if banks keep a list of those who've done that but it seems reasonable to me.

[Ibrahim Hughes]

Wayne Brooks - He should know the difference and I thought it was odd as well. However he did tell me that the deal was "assigned to him at the last minute", so no telling what the heck happened.

[Ibrahim Hughes]

Originally posted by John Mireles:

Is it possible that he took out an owner-occupied loan at some point but then used it to flip a property instead? Don't know if banks keep a list of those who've done that but it seems reasonable to me.

No he's a cash buyer with 12 years of experience although he just started buying short sales.

[Wayne Brooks]

It would have to be sloppy title co. work, and sloppy review on WF's part when they got the Final HUD and wire. They would have killed the transaction had they noticed it sold to someone other than the one named in the approval letter. Still, that would make him the "Flippee" not the "Flipper". Seems the flipper would get black listed. He should be able to get a staright answer, but maybe not.

[Wayne Brooks]

Ibraham,
Forgot to mention....I negotiate short sales, and the name on the HUD/Buyer at the closing table, has to match the name on the issued approval letter.

[Ibrahim Hughes]

That's what I thought Wayne Brooks as I have been involved in a few on the Realtor side. But it could have been done some other 'creative' way such as selling the LLC and assigning the interest that way. And who knows, the flipper may have been Blacklisted as well. I'm going to see if I can get a copy of that email.

[Wayne Brooks]

Yep on the assigning of interest in an LLC. Most banks won't allow the buyer to be a land trust, some won't allow Corps for anti flipping reasons. Maybe LLC's are next.

[Brian Burke]

I know that not long ago, WF wouldn't finance the buyers of my flips. If I received an offer from a buyer with a WF pre-approval letter I'd ask them to switch lenders or I'd reject the offer. They simply refused to do the loan if the house was owned for less than 90 days. I don't know if this is still true (haven't had a WF buyer lately for some reason) but it sure seems that WF has something against flipping!!

[Robert Adams]

I wonder if simply using a new LLC would solve the problem or if they look deeper as to who is managing members etc.

[Meidrian Durden]

Wayne Brooks I thought there was no way around for the banks to deny someone using a land trust ( to avoid double closings on reo's). But as for the "blacklist" how can the banks(making us double close), government, or WHOEVER dictate such a thing, when what we do as RE investors is PERFECTLY LEGAL?

[Wayne Brooks]

Immediate flipping of a short sale obviously tells the bank they didn't get the best price. They don't HAVE to agree to taking a hit on a loan, so yes, they can dictate the terms and conditions. Just because it's legal doesn't mean the banks have to agree to it. Buying the property for half of FMV would be legal.....

[William Bannister]

Its simple inform all future buyers of your flips WF isnt able to close your deals and it would be advised they seek financing elsewhere to buy your deals. The legality of steering isnt a problem here because you have documented proof they are not willing to finance your deals. When your buyers write offers on deals make a list of banks and credit unions that arent black listing you and just explain to them that in light of recent bank lending policies you have had better luck with the following institutions. There is no law that says you can give advise to buyers when they write offers on your property. Even a flier explaining how certain deals would not close with certain lenders its possible to avoid this issue. It can also be something your listing agent can make part of your counter offers so its not a surprise as moving towards closing. If banks want to play dirty with you we will play dirty right back. You are factual when you explain to them why they should use other lenders. I would use terms like wells Fargo has a lower close rate with our company. Why because its true they do have a lower close rate. You see you can be honest and then show them a bank or credit union that have a less strict guideline.
The the one big flaw with capitalism is the big banks and Fed/ spending printing machine.

[Meidrian Durden]

Thanks Wayne Brooks...Good Stuff William Bannister!

[Bill Gulley]

How about investors black listing WF.....for awhile? That you can do, but...

hmmm, cant @ William with an edit...

Was it clsoed with the impression it was to be owner occupied?

Don't see how if it was an LLC buying, kinda obvious....

[Bill Gulley]

William Bannister, you wouldn't think there wouldn't be a law, but you need to be careful how you go about that. One, you can get close to steering, an approved list would probably avoid that issue.

Making any attempt to discredit any insured lender by false claims is illegal, or to interfer with any bank promoting lending activities can land you in court, it can be civil and criminal. So is making any threat to any bank employee in connection with banking activities.

If you do something that puts the profitability of an insured bank at risk you can get nailed. That does not mean you must do business with them.

Think in terms of corporate defimation....

The bankers already thought of this one and got to law makers for protection.

[Ibrahim Hughes]

Originally posted by Bill Gulley:

How about investors black listing WF.....for awhile? That you can do, but...

hmmm, cant @ William with an edit...

Was it clsoed with the impression it was to be owner occupied?

Don't see how if it was an LLC buying, kinda obvious....

William Bannister and Bill Gulley - to clarify the buyer did NOT use WF as a lender. He came in with cash (perhaps from a hard money lender). He was purchasing a short sale where WF was the lender and he was the end buyer. Thanks for your input guys.