Wells Fargo New Approval Letter does not provide a waiver of deficiency!!! Has anyone had this issue recently??!!!

Just received an approval from Wells Fargo it seems they now have new verbiage which states, "With the exception of a Home Affordable Alternative (HAFA) closing, nothing in this Demand Statement or in the release of the mortgage shall waive the right to seek a deficiency under the loan documents or any of its other rights there under, and the obligations evidenced by the note shall remain in full force and effect until paid in full."

 

Seller refuses to close unless we obtain a "FULL WAIVER OF DEFICIENCY"!!!  I called the Final Negotiator and requested such, however, she told me this is the new language and not her nor her supervisor or anyone else for that matter can change this verbiage;  WF legal department is aware of this.  Is there anything that can be done????????????HELP!!!!!!!!!!!!!!!!!!!!!!!!  In the meantime we have an approval but the seller will not proceed!!!!

 

Any suggestions will be greatly apprecaited!

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Permalink Reply by Samuel Hilbert on May 16, 2012 at 5:15am

I had been following this thread a little nervous as I had been waiting on an approval letter from Wells Fargo. It is a Freddie Mac backed loan so I knew I could take care of the deficiency if I needed to but was hoping not to have to worry about it anymore. I received the letter this morning and because some people had asked what wording would be on it thought I would share. Here is the wording about the deficiency:

"When Wells Fargo Bank, N.A. receives the required payoff and all required documentation, we will arrange for the mortgage of record to be released. Wells Fargo Bank, N.A. will notify the major credit bureau(s) to reflect "account paid in full with less than full balance" which should appear on the credit report within 60-90 days the date of notification, however, Wells Fargo Bank, N.A. is not a credit bureau and cannot control how or when the report will reflect information to other users of credit reports. Compliance with this demand statement coupled with release of the mortgage shall waive the bank's right to seek a deficiency under the loan documents or any of its other rights there under, and the obligations evidenced by the note."

I figured this is good news for everyone at least on Freddie Mac backed loans. Hopefully Wells Fargo will incorporate this wording on other loans again soon as I have a non-Freddie Mac short sale that did have deficiency removal but because of a switch of buyers will likely now come with the wording that has been referenced in this thread...likely causing my seller to not want to close.

Good luck...if you have a Freddie Mac backed loan at least there is hope there!

Permalink Reply by Ken Ryan on May 16, 2012 at 5:37am

Hi Samuel

 

Thank you for sharing. This is good news. Once again it points out the importance of keeping informed. Knowledge is powerful. Good luck and best wishes.

Permalink Reply by Amanda on May 16, 2012 at 1:38pm

hi Sam,

 

Thank you for posting.  It's fantastic news.  I know about nervousness.  I have been very nervous for going on almost 1 year now.  : )

I am not a realtor, but a seller.  I am not as knowledgable as most on this forum.  Can you tell me what you mean by this:

 It is a Freddie Mac backed loan so I knew I could take care of the deficiency if I needed

Can you give me some ideas about what I can do if it's a FMAC loan and WF doesn't change the waiver language?  Should I call Freddie Mac myself?  Should I call WF myself?  What did you mean by the above statement?


Thank you for your help.

Amanda

Permalink Reply by Samuel Hilbert on May 17, 2012 at 7:17am

Hi Amanda -

By that statement I meant that I knew that I could fight it if need be because of Freddie Mac's posted guidelines. However, I sure didn't want to have to fight it and I'm very glad I didn't end up needing to. If the letter would have been not had the necessary language I would have started with Wells Fargo and simply reminded them of Freddie Mac's requirement to see where that lead.

Based on my experience my guess is that on Freddie Mac backed loans Wells Fargo will be handling the situations correctly...or if they make a mistake it should be pretty simple to ask your negotiator to fix the letter. Obviously they have that ability since they did it on mine.

If your loan is Freddie Mac backed I would probably not get too worried though. Hopefully Wells Fargo will get their heads together and fix the language on all of their letters though soon.

Good luck!

Permalink Reply by Wendy Martin on May 17, 2012 at 7:19am

That's just what I did with Wells.  They sent approval letter with no waiver of deficency, asked for that language, got nowhere.  Sent copy of new Freddie guidelines and had the new approval letter with waiver of deficiency within 1 hour.

Permalink Reply by Samuel Hilbert on May 17, 2012 at 7:23am

Good to hear and congratulations! Hopefully it remains that simple!

Permalink Reply by Amanda on May 17, 2012 at 11:59am

hello Sam, Lisa, Ken and Wendy (and everyone),

OMG, what difference 24 hours can make.  I got the correct approval letter from Wells Fargo today (dated today, 5/17) with the waiver language.  I will post that later when I am not on the road, which I am.  Just to remind everyone, I was so nervous about this SS and on 4/25/12, had received an approval letter from WF on a FMAC loan without the waiver language that we were all discussing on this thread.  After I started understanding what you were all talking about on this forum, I started to finally have some hope and then WHAM, I got this letter today.  Sam and Wendy's clarification that I just needed to produce the FMAC guidelines is fantastic.  I sent the FMAC guidelines (dated 2/15/12) to my title company rep, who was doing the negotiating with WF a few days ago but by then, the title company seemed to feel that whatever they were doing was working.  If it didn't work, I was going to go to WF myself through the San Antonio office (per Lisa's recommendation) and whip out that FMAC guideline. 

Thank you very much to all for sharing.  I started the SS process back in July 2011.  I had an approval and a buyer back in December but the buyer couldn't get financing at the last minute, started over with the process and had the approval on 4/25/12 with a new buyer w/o the waiver language, which now I have in the new approval letter I received today (5/17/12).  As I said, I have been at this since July 2011.  I am the seller and am not a realtor.

 

Good luck to all of you trying to get your approval letter.  It's great news we keep getting with Lisa's then Sam's then my approval letter being changed. 

 

My best to all,

Amanda  

Permalink Reply by Sam on May 19, 2012 at 9:35am
Finally received response from the negotiator, sounds like a bs response

"Per the recent Attorney Generals ruling, Wells Fargo Home Mortgage, as the servicer, cannot waive the deficiency on behalf of the investor.  

Keep in mind the letter does not state that a deficiency will be sought, only that the option is there.  Seeking deficiencyfor most investors is simply too costly.  Can you help the seller understand to see if they would be willing to continue with the short sale?  

Please let me know if the property needs to be removed for the short sale process or not."

If he is referring to the recent attorney general settlement, it actually placed more burden for them to forgive deficiency, not the opposite. Looks like my battle will continue....
Permalink Reply by Sam on May 22, 2012 at 5:03am

Most recent response in my quest...

 

"The letter is in compliance with the National Servicing Standards we must abide by. We are unable to change any wording in the letter.  Please advise if the seller wishes to continue with a short sale on ths property.  Thank you!"

 

He references the attorney general ruling then the National Servicing Standards, put the two together and he is referring to the settlement for robo signing scandal, which was rolled out with new National Servicing Standards.  All I can find thus far is the attached bullet list from the government website.  Does not mention anything about servicers requirement to not waive deficiency on short sales if they are not the investor.  If Wells Fargo is correct and the first to adopt, that means other lenders will be following suit and issuing similar letters.  I will keep researching.

Attachments:
Permalink Reply by Kris Lindahl on May 20, 2012 at 1:54am

If someone has been successful in getting the deficiency language changed on a non-govt backed loan please let me know.  I haven't been able to get Wells to remove this verbiage on a mortgage backed security loan serviced by Wells.  This is the first time I have had Wells Fargo not waive the deficiency.  This new letter is not good!

Permalink Reply by Joanne Finochio on May 23, 2012 at 4:08am

I received a Wells Fargo approval letter stating the same. They asked for a cash contribution as well.  I was going to do a HAFA short sale and they said they received the paper work a day late and closed the HAFA file.  Now they wont change the verbiage in the approval letter and will close the file if the seller dosnt sign. 

Permalink Reply by Jason Ellis on May 23, 2012 at 9:11am

In SC as well -- Just got the same letter...  Closing officer had the nerve to say "it's unlikely they will peruse them for the deficiency"...  Offered cash contribution to get waived and he said it can not be changed. 

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