Wells Fargo Home Equity blackmail?
WF Home Equity is in second position on my listing. The first has offered 6% of sales price to satisfy the lien. The property is in California and WF says "Hmmm. That's tricky because you are a non recourse state. we'll have to have a 1% contribution from somebody. we don't care if it comes from the buyer, seller or agents. I pointed out that was against the law in California and was told they are aware of that and don't care."
I explained that all real estate negotiations have to be in writing and on the HUD so please send me the request in writing or I can put it in escrow instructions. They said "forget it".
What kind of experiences are you having with WF Home Equity? The seller had 90% conventional loan and 10% home equity to purchase. The original home equity line was refinanced with no cash out to get a lower rate.
Replies to This Discussion
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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on
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Beth - In CA, the lenders have two choices on short sales 1) approve it with no contriution or deficiency or; 2) decline it. Unfortunately it sounds like they declined it....
Tape record all future conversation with them. I use Ring Central.
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Permalink Reply by Jim McCormack on
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I cannot comment on the law in CA, but the payment would not necessarily have to be on the HUD1. The seller could pay before closing. Since the seller already owes the money per the original mortgage loan, this can be classified as a curtailment payment and be entirely legal. The lender would issue a short sale approval letter with the total owed to approve the short sale. The seller (or buyer for that matter) would then send in the $1,000 payment and the short sale letter would be altered to reflect the $1,000 payment, and, therefore, lower amount needed to close. There are some logistical issues with this method, but it is legal.
Also, cash transactions are not covered by RESPA so lots of things can be left off the HUD1.
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Permalink Reply by Katherine Muhs on
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...so long as it doesn't constitute fraud from the short sale lender's perspective.
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I just closed one in Cal with Wells Home Equity as the 2d. Wells wanted $2K more than the 1st td holder would allow. The buyer agreed to pay some of it, so long as he didn't have to pay all of it. The seller volunteered to make up the difference and we sumbitted the HUD to Wells noting a small seller contribution to augment the buyer contribution, also on the HUD. Wells declined the HUD because of Cal SB458. Although there's nothing in this Cal law that says the Seller can't volunteer to make a contribution, my negotiator told me Wells management wasn't comfortable with it anyways. As the listing agent I then offered to make that contribution, I submitted a new HUD with "agent contribution" and received the approval within 48 hrs. Also, please be aware: to my understanding (I'm not an attorney), SB458 does not make it illegal for a short sale lender to require a cash contribution -- it does say they can't require it from the seller. Also, Wells does not allow negotiators to send emails out or receive them. Just go with what the negotiator tells you, note it (or record the conversation with their knowledge) and proceed accordingly.
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Permalink Reply by Lori Young on
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Beth: My suggestion would be to speak with the department manager and let them know you are not doing any deals off the HUD-1. Let them know that it is 6% take it or leave it. Im sure the manager will accept 6%. The rep may be asking for 1% as the bonus for himself. Good luck.
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Permalink Reply by Stephanie Hart CA 310-930-2342 on
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How did this go? Did it close?
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