Wells Fargo Bank Sucks!

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Wells Fargo Bank Sucks!

Thomas C.
Real Estate Investor · Philadelphia, PA · Member since 2011 · 16 posts · 0 votes

I am very upset at Wells Fargo Bank. We had been with the former banks Wachovia etc. since 1989 and NEVER had any late payments on anything!

Now Wells Fargo Bank - CEO John Stumpf recently received $25,000,000,000.00 Billion in Bailout Money and has closed our Home Equity Line of credit which was at 2.25% of $100,000.00 (with only $22K owned on it) against our paid for home valued today at $275,000, just because of a short sale on 2 investment property in NC we bought in 2006 and closed on in 2007.

Is this right? I have talked to 4 or 5 "Executives at the Bank" ie: Kathy Crowder, Debbie Clausen, Patty Harvey, Leslie Murdock and a few others who all read from the same script saying... we appreciate your many years with the bank but it will take 7 years before the 2 short sales "drop off your credit report and we can re-open your line"

It is Bull! All they want to do is to open a new HELOC at some out of this world rate of 12% or so is all. Wells Fargo and John Stumpf CEO, likes to kick you when you are down, even though they took $25 Billion in government bailout money which was mine and yours Taxpayer dollars. Unreal?

The housing market dropped 50% and the rental market went down 30% to 40% around Charlotte NC. After almost 4 years of loosing money on 2 properties there and not having tenants we had to short sale them both. One was sold in Jan and if Bank of America approves maybe the other one will be gone in March 2012. Each property is bringing in about 50% or so of what is loaned on it?

As this is my first short sale ever......So what happens now?

This wrecked our credit score from 815 to 630 (Last time I checked it)

John Stumpf the CEO of Well Fargo Bank took $25 Billion Dollars of BAILOUT MONEY and then don't want to lend to people who are able to pay it back. This is why the country is in so much trouble! God Help Us!

If something like this has happened to you then, What advice "if any" do you have for me?

John Stumpf, CEO of Wells Fargo HITS THE JACKPOT with $25 Billion in Bailout Money - Now what are they doing with it? shhhhh we want tell you?

http://www.cbsnews.com/stories/2009/02/09/eveningnews/main4788018.shtml

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Matt O.
Wholesaler · West Bountiful, UT · Member since 2011 · 12 posts · 7 votes
14y

Were you wearing clothes when you went in to discuss this with Wells Fargo?

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  • Nathan Emmert
    Investor · San Ramon, CA · Member since 2011 · 1k+ posts · 569 votes
    14y

    Take your medicine.

    Lets face it, you made a poor investment decision, and in the end you're paying for it. Do you really feel there should be 0 consequence on your end for the short sale?

    Sure, the banks are partially to blame for the bubble. Their lending practices drove the demand up astronomically against a fixed supply therein driving up the prices. On the other side, their belt tightening further decreased the demand against a then growing supply causing the prices to tank. But at the same time, no one "forced" anyone to buy a house.

    My short sale hasn't hurt me much. I was able to qualify for an FHA loan 3 months after the short sale. In a few more months I'll hit the 2 year mark and be eligible for conventional funding on investments again. My credit has rebounded and I have secured financing through several local credit unions. There are options, you just have to put in the legwork.

    Step 1 is to stop playing the victim card. You made choices, things happened, figure out how to make the best of where you're currently at and start moving forward instead of staring backwards.

    1Reply
  • James H.
    Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
    14y

    It sounds like you have two problems. The frist problem is that you are angry that the world isn't "fair". The second problem is that you made (apparently) poor investment decisions and now are in a position where you cannot repay your obligations in full. So your credit gets hurt and you loose access to likely the best interest rates in existence. It does not seem unreasonable to me that you can't have the best interest rates in this world if you've had two short sales, despite hvaing had a good payment history in the past.

    As far as the bail out, that's another story. But it's already done and over and being mad about it won't change it or improve your situation.

    What else can you do but pick up the pieces of what you do have and soldier on? How many people besides yourself do you know could get two short sales and still have credit near good enough to still qualify for a mortgage?

    2Reply
  • Bienes Raices
    Orlando, FL · Member since 2009 · 2k+ posts · 282 votes
    14y

    Wells denied my HELOC application earlier this year, so I feel your pain, but I took the advice of some people here and went to a small local bank, where I was able to get a cash out refi. Maybe your energies would be better directed towards finding alternative solutions to your problems rather than railing against situations you have no control over.

    2Reply
  • Thomas C.
    OP
    Real Estate Investor · Philadelphia, PA · Member since 2011 · 16 posts · 0 votes
    14y

    Nathan and Brian,

    Thank you both so much for your post. They both made good points and made me reflect and think. "Take your medicine" "Soldier on" ... good words of wisdom. So Kudos for that.

    I was always used to being the most handsome guy at any party in the world (at banks) now I am the ugly duckling and its hard to take. Trying to figure out the best way to fix it?

    What other viable options do I have to get money to:

    1. Pay the capital gains on the about $150K in debt forgiveness from Chase and Bank Of America? I "assume" I will get a 1099 for the lost money or the difference between the amount we owed and what was left after the short sale?

    To be honest this is my first short sale so I really don't know what to expect?

    2. Get more money for investing in good rental properties since there as so many deals all over the country?

    Thank you in advance for your expert input and advice.

    Thomas

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  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    14y

    Wow, 100k at 2%. I would have maxed that out before the short sale hit. Thats free money.

    But if you think you're the only one that got cutoff, get in line. And the line forms at the end of road, down the alley, over the hill and through the woods. A lot of people had their heloc's closed out with nothing negative even showing up. The banks were simply cutting those off because they wanted to get rid of the liability.

    I had mine turned off a few years ago when BofA was going through that crazy stretch. Luckily I was keeping up on the news and pulled everything out of it but a couple thousand before they did it. I'm at 2.5% right now on it and its the best money I'll ever get.

    Sad but in this case, I'm not sure I disagree with their logic. You had 2 short sales which means you effectively had to stick the other bank with losses because you couldn't pay the loans you promised to pay. I'm actually surprised a bank allowed you to do a short sale on the other properties if they would have saw you had a house that was completely paid off and a heloc of 100k with 78k available. Seems like they should have had the right to make you kick in something to make up the difference.

    I'd be surprised if it really took 7 years for you to get another LOC. Maybe with them if they're cutting down on the risk. But you should have no problem getting something from someone else fairly quick. I'd bet 2 years tops......

    0Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    14y

    Yikes. Before you agreed to the short sale, you should have worked that out as part of the deal - to make sure they didn't hit you with the statement.

    Otherwise, you'd have been better off with a foreclosure. At least thats what your negotiating stance should have been.

    I believe that there was a law passed in 2007 that covered who was able to discharge the income from a foreclosure. Bankruptcy, insolvency, non-recourse loan... Not sure what the details are but you may want to look into it before you panic too much.

    0Reply
  • Zachary Dosch
    Bismarck, ND · Member since 2011 · 142 posts · 16 votes
    14y

    Wells didn't actually need the bail out money - All of the banks were forced to take it whether they needed it or not. Wells actually paid 6% interest on the money plus a prepayment penalty because they paid it off early. Sounds to me like the tax payers got a pretty good deal.

    You can't expect a company, especially one like Wells, to want to lend you more money after you just stuck them with the bill for the last one. Why should they?

    I think your best bet is going the route of the smaller local banks, move all your depository relationships to that bank, and start rebuilding with them. Wells has a very low incentive to business because the interest rates are so low and they already have 1 in 4 mortgages. Find some lending institution that has a higher incentive to do business. Newer banks are usually the answer.

    1Reply
  • Steven Hamilton IIPro Member
    Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
    14y

    Thomas,

    In regards to your capital gain statements. You will treat the FMV of the home at time they took it over plus the amount of the loan cancellation as the sales price on Form 4797 when the bank actually sells the property.

    [email protected]224-381-2660
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  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    Note: I had to edit this a few times to stay constructive.

    Regarding "... almost 4 years of losing money on 2 properties there and not having tenants we had to short sale them both"... it's tough when investments go bad. I would have liked to walk away from margined stock purchases in 2001/2002 too. I didn't have an entitlement bailout like you have. They cut you off, and rightly so. Next time, do better.

    As Zachary Dosch said, it isn't Wells/Wachovia. I have had $1MM+ business with them. I have "losers" just like you. Yes, these bad investments suck. But ultimately their actions are in response to your actions. Keep your head up. I'd suggest staying local and stay focused on profitable and 'simple' (if this makes sense... although I know it is a misnomer) investments.

    1Reply
  • Jeff B.
    Investor · Fullerton, CA · Member since 2011 · 2 posts · 1 vote
    14y

    Thomas could you provide further clarification on your statement:

    "In regards to your capital gain statements. You will treat the FMV of the home at time they took it over plus the amount of the loan cancellation as the sales price on Form 4797 when the bank actually sells the property."

    Much appreciated,

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y

    Look at it from their side...

    Would YOU loan $100K at 2% to someone with a 630 credit score?

    I certainly wouldn't...

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
    1Reply
  • Thomas C.
    OP
    Real Estate Investor · Philadelphia, PA · Member since 2011 · 16 posts · 0 votes
    14y

    [i]Steven Hamilton II

    In regards to your capital gain statements. You will treat the FMV of the home at time they took it over plus the amount of the loan cancellation as the sales price on Form 4797 when the bank actually sells the property.

    In regards to your capital gain statements. You will treat the FMV of the home at time they took it over plus the amount of the loan cancellation as the sales price on Form 4797 when the bank actually sells the property. [/i]

    Steven, Thanks for your response, but I am new at this (at least a short sale) and 90% of what you said went over my head could you please break it down for me in simple terms?

    Also one posted said did I "expect to have 0 negative effect".

    Just to add some more specific details to my saga, here are the facts:

    Well on the 4 bed 2.5 bath 2 car garage Charlotte NC house I paid $170K for and put down 20% CASH with closing it was about $40,000.00 I lost up front.

    Short sale don 1/12/12 for $80K Net $70K on a owed amount to Chase for $141K. I paid $170K pre construction in 2006.

    On the pre construction, 3 bed 2.5 bath 1 car garage Townhouse in Charlotte NC, I paid $160K for and put down 20% CASH and with closing it was about $35,000,00.00 I lost.

    This one is still in motion with Bank of America and has an offer of $66K on a $136K loan that I paid $160K for in 2007.

    So to me losing $75,000.00 CASH in 4 years, on top of a short sale is not a 0 negative effect.

    NOTE: At least I have 4 other properties in NC that are cash flowing a few hundred dollars a month and rent well for the area market. Thank God! ;-)

    I greatly appreciated all the wonderful feedback, Thank you all!

    0Reply
  • Matt O.
    Wholesaler · West Bountiful, UT · Member since 2011 · 12 posts · 7 votes
    14y

    Were you wearing clothes when you went in to discuss this with Wells Fargo?

    3Reply
  • Matt O.
    Wholesaler · West Bountiful, UT · Member since 2011 · 12 posts · 7 votes
    14y

    Seriously though, you can't hate a lender for closing a credit line when your credit changed dramatically.

    0Reply
  • Joe Delia
    Involved In Real Estate · Rochester Hills, MI · Member since 2010 · 812 posts · 178 votes
    14y

    lol @matt oviatt I don't know what you're so mad about. Mentioning how much money they took and didn't want from a socialist government several times doesn't change that you took two short sales. You have other cashflowing properties as you mentioned, you didn't HAVE to take the short sales from what it sounds like. You could of been rolling those profits into these "losers". You chose not to, so you also chose to that the credit hit and lose your credit line. I'm not saying you were in the wrong, but, you got "Bailed out" also from wells. Take your medicine and move along.

    0Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    Hey, Thomas C. knows what he knows. Wells Fargo gets $25B in bailout money and they cut him off. He says "Is this right?", then "It is Bull!" and "Wells Fargo and John Stumpf CEO, likes to kick you when you are down, even though they took $25 Billion in government bailout money which was mine and yours Taxpayer dollars."

    Well, let me see. It is well known that Wells Fargo paid the money back, and they haven't used the term 'TARP' in annual SEC document filings for years. They say in SEC filings, FYE 2009 "On December 23, 2009, we redeemed all of the preferred stock issued to the U.S. Treasury and repaid the entire $25 billion investment plus accrued dividends." From what I found, they paid the $25B and an additional about $1.5 Billion in dividends related to TARP.

    Scorecard: Wells Fargo paid their loan. Thomas C didn't.

    That's the reality.

    3Reply
  • Thomas C.
    OP
    Real Estate Investor · Philadelphia, PA · Member since 2011 · 16 posts · 0 votes
    14y

    Yes, Matt I had a shirt and tie on :-) But thanks for noticing, wink wink ;-)

    Joe, I had no other viable options. These are not my home where I live, they are investment properties to earn money from .

    I also tried to rent the properties. The first 4 bedroom house was getting $1350.00 per month in 2007 then dropped to $895 in 2010 then I never could get any tenant at any price. I paid $170K for it in 2006 with 20% down and the note on it was about $1,100 so it was cash flowing $150 a month in a growing area (so I was told by the seller) which never came to pass.

    After paying the note on it for $1,100 a month on it with NO tenants for over a year I listed it for Sale at the $141K I owed on it and after 6 more months got no offers. So with having paid over $19,000.00 + on mortgage payments I called Chase and they suggested a short sale. So I hired Short Sale Carolina to move it and it took 6 more months and it went for $80K. Trust me I did all I could do to keep it but was tapped out.

    On the townhouse located in Calloway Glen in Charlotte (bought from the same company that folded Convergent Acqusitions) it was a 3 bed 2 bath for $160K in 2007, rented it then for $1,250 note was about $1,050. Rents dropped as low as $800 then it also went vacant for 8 months. During that time I even refinanced it for the closing cost of $3800 to drop the rate to 6.5% and right after that my management company (Park Ave Properties) could not find any tenant. They put a section 8 tenant in there at $795 a month and she stayed 4 months and only paid for 1 month. It took 3 months to evict here.

    She left the place a wreck, so I paid to repair it and they never could find a tenant for it. I payed the $1,050 note on it for almost a year, and I am still paying the HOA Fee's each month at $135.00 per month on it now.

    I called Bank of America and they said "Either pay us the $136K you owe on it, let us Foreclose on it or you can apply for a short sale. That is what I had left as an option after paying about $13,000 in mortgage payments with NO tenant in place or other income coming in.

    This townhouse in Calloway Glen in Charlotte is a very nice 3 bed 2.5 bath with his and her sinks, and a 1 car garage end unit. Nicest largest unit in Calloway Glen and is up for short sale today accepting offers. So far one offer at a LOW $67K with $136K owed. Comps are about $80K to $100K today from my internet search but I think this complex has about 10 for sale now, but not as nice as ours. So no telling what will come to pass.

    Note: On a good month our other 4 properties total only cash flow about $600 to $800 total a month if we don't have vacancies or repairs etc. So no extra money to "prop up" these sinking properties and I did not get any bailout from the government either.

    Our house hold income from our jobs is a little under 6 figures a year and my credit score was near perfect! 815 was our middle. Now I am sure its in the low 600 range and Wells Fargo says it will take 7 years to "cure" this with them.

    Just trying to figure out what happens now with the taxes or capital gains on any bank debt forgiveness etc on these 2 properties and how to move forward and keep making money in Real Estate?

    Again I thank each of you for your suggestions, support and feedback, constructive or otherwise!

    0Reply
  • Jason S.
    Investor · Diamond Bar, CA · Member since 2009 · 446 posts · 233 votes
    14y

    Too much to read really.

    In the end I would like to reiterate 2 points that have already been made.

    1. You should have seen the writing on the wall with your HELOC - I do not know anyone that did not max theirs out or at least make the conscious decision to not, knowing it would be taken.

    2. You stiffed the bank for how much I do not know on your other properties, that was real cash they gave you for those homes. You walk away and assume that others like Wells should continue to trust you? Are you not self reflective enough to know that YOU, yes YOU created financial loss to the other banks, investors, maybe even taxpayers etc. How can you not see this and come here crying the blues?

    1Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    Thomas, you are a funny dude! Regaqrding "... I did not get any bailout from the government either", that's not true. You even said so, with "bank debt forgiveness" on your short sales. You say your beef is with Wells, but Chase and BoA had your mortgages that sustained losses bacuse you didn't pay them off. Most likely these were insured loans sold off(1) to an MSE (Fannie Mae or Freddie Mac) when you closed, and you were using government subsidized money because these were originated as non-owner occupied loans and intentionally sold. These MSEs are in conservatorship and entirely dependent on federal government support. My tax dollars bailing you out. You should be grateful of the fact that these banks aren't enforcing a deficiency judgement and instead provide (your words) bank debt forgiveness. From us taxpayers, you're welcome.

    (1) SEC docs cerca 2006, search for '“originate to distribute” strategy' where they retained virtually no mortgages...

    0Reply
  • Matt T.
    SFR Investor · CB, IA · Member since 2011 · 91 posts · 42 votes
    14y
    Originally posted by Thomas C.:
    The first 4 bedroom house was getting $1350.00 per month in 2007 then dropped to $895 in 2010 then I never could get any tenant at any price. I paid $170K for it in 2006 with 20% down and the note on it was about $1,100 so it was cash flowing $150 a month in a growing area (so I was told by the seller) which never came to pass.

    Thomas, Sorry to hear you ended up in a tough situation. The above portion makes me a little nervous. You mentioned the property was "cash flowing" $150 a month because rent was $150 ($250 actually) higher than your payment.

    Are your other properties in the same situation? I'd look at unloading them if that's the case and you can sell for what you owe. There are other expenses not considered (vacancy, maintenance, etc) and those could end up being a big drain as well. While the situation is bad now, it could certainly get worse of those units have an issue.

    0Reply
  • Thomas C.
    OP
    Real Estate Investor · Philadelphia, PA · Member since 2011 · 16 posts · 0 votes
    14y

    I am curious that if I have a perfect payment history with Wells Fargo and its former banks since 1990 why would they go out of their way to "randomly check my credit score" and say because of the housing market falling out of my control and having to proceed with 2 short sales, that it would have any bearing on my repaying any money on a HELOC from Wells Fargo?

    Also the fact that my home is paid for and worth easy today $250K or so as backing versus say $100K (40% of its value) and my DTI is about 32% currently?

    What "Prompts" any bank to "randomly check as they say" a persons or customers credit score?

    I also have not yet or do I know for sure that I will receive "any debt forgiveness" from Bank of America nor Chase, just making an assumption that MAY happen? They may come after me for the difference in my loan amount of $140K and the sales price of $80K on the first property and who knows on the second since its still for sale?

    Does anyone know or have anyone else been through a fully completed short sale and what happens with it all to the very end? Taxes etc?

    0Reply
  • James Hiddle
    Altus, OK · Member since 2008 · 2k+ posts · 690 votes
    14y

    LMAO I bet Thomas was expecting sympathy from everyone here when he started this thread but he ended up getting spanked instead!!!!!

    As everyone stated man up,take your loss like a man and work on getting your credit back into good standards.

    0Reply
  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y
    Originally posted by Thomas C.:
    I am curious that if I have a perfect payment history with Wells Fargo and its former banks since 1990 why would they go out of their way to "randomly check my credit score" and say because of the housing market falling out of my control and having to proceed with 2 short sales, that it would have any bearing on my repaying any money on a HELOC from Wells Fargo?

    Your credit score isn't an indication of how good your investments are, it's an indication of how trustworthy you are in terms of paying your debts. The fact that your score is 630 indicates that you aren't overly trustworthy when it comes to paying your debts (and the fact that you did two short sales when it sounds like you could have kept making the payments just solidifies that fact).

    So, if you're not trustworthy when it comes to paying your debts, why would a bank choose to loan you money if they had the option not to.

    You never answered my question from earlier: Would YOU loan $100K to someone with a credit score of 630?


    Also the fact that my home is paid for and worth easy today $250K or so as backing versus say $100K (40% of its value) and my DTI is about 32% currently?

    Banks aren't in the real estate business, they're in the lending business. They don't want your house, regardless of its value...they just want their payments. And the fact that other creditors stopped getting their payments from you indicates that repaying *ALL* your debts is not the highest priority for you.


    I also have not yet or do I know for sure that I will receive "any debt forgiveness" from Bank of America nor Chase, just making an assumption that MAY happen? They may come after me for the difference in my loan amount of $140K and the sales price of $80K on the first property and who knows on the second since its still for sale?

    It should be stated in the Purchase and Sale Agreement. Are you working with a good short sale agent to get your sale done? If so, s/he should be ensuring this gets done.

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
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  • Cheryl C.
    Investor · Reston, VA · Member since 2011 · 683 posts · 191 votes
    14y

    Thomas,

    I have an idea; why not sell that paid for home of yours and pay your debts! That may cure your credit woes. Btw, many (myself included) had heloc's frozen or cancelled and never missed any type of payment in our lives. I'm also sure that many here have lost money on an investment from time to time. Most aren't given the option to stiff someone because they made a stupid decision. Be thankful you are even allowed to do a short and have your debt forgiven, rather than be forced into bankruptcy. If you do not know whether your debt has been forgiven or not, you've got way more problems than can be addressed here.

    0Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    14y

    Regarding "What "Prompts" any bank to "randomly check as they say" a persons or customers credit score?"

    Wachovia (now Wells Fargo) has a long standing policy to check credit on HELOCs. Virtually all lenders do the same thing. Read the documents you signed. Look at your credit report(s) and you'll see them (Wachovia or Wells Fargo) listed under "Account Review Inquiries". They are "soft pulls" and allegedly will not affect credit scores. It's a routine risk management practice.

    1Reply
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