Wells Fargo’s Exec Forecloses on $12 Million Malibu Beach House – Then Moves in for Summer Fun. And why not?
It’s all over the news… Wells Fargo’s Senior Foreclosure Justification Officer tossed out the owners of a $12 million Malibu Beach House, raped by Bernie Madoff, and decided… what the heck… might as well move in for some summer fun.
The funny thing is… it seems that many people are actually upset about this. Outraged, even. As in: “My goodness Martha… this is outrageous!”
In response, Wells Fargo immediately jumped into its best “we’re outraged too,” posture, vowing to investigate immediately and get to the bottom of the situation. Like, I’m sure heads will roll. Wells Fargo is tough on crime, don’t you know. I have three things to say about this whole thing:
First of all… I’m sure the house-sitting Wells executive that hosted parties throughout the summer never invited anyone from Wells Fargo… or B of A… or Chase, IndyMac, etcetera, etcetera, etcetera. I’m sure most of the exec’s friends are from outside the banking industry. So, it’s likely that other bankers had no idea what was happening.
Second of all… I’m confident that this is an isolated incident. Probably the only time this sort of thing has ever happened. Those that think otherwise are just being cynical and unfair.
And third… I wonder if the Wells Fargo spokesperson that promised that the bank did not condone such behavior was calling from a recently repossessed late model Range Rover.
A few weeks ago, the Obama administration released its “report cards” showing that the banks and mortgage servicers that agreed to participate in the Making Home Affordable program, hadn’t. Wells Fargo received the lowest grade of all… 4%. Four percent of the Wells Fargo mortgages that might have been modified and therefore saved from foreclosure, were modified. And that includes the old “trial period trick,” in which some homeowners are permitted to make three more payments before the bank forecloses anyway. Four percent. Wells Fargo… four percent. Very well done indeed.
Were people outraged at that unbelievable underperformance? Yes, some were. In fact, I seem to remember how the mainstream media reported it… collectively they said: “Yawn.” Then they went back to debating a health care bill that doesn’t yet exist, asking questions about whether Obama will be able to give health insurance to everyone in America without increasing the deficit by even a dime, as the president put it during one or more of his Presidential Pitches.
Apparently, Obama’s health care for everyone plan is going to work a lot like loan modifications… it’s going to be free. And so why shouldn’t it be free? Don’t question him about it either, because he’s made damn sure that Republicans understand that he’s not going to tolerate partisan dissent.
Okay, fair enough. I’m for all of it then. Free stuff all around!
So, with that in mind… let’s not get all worked up over a Wells executive moving into a foreclosed $12 million beach house she had taken off the market for the summer. I say Wells executives should be allowed to start looking at the hundreds of thousands and soon to be millions of foreclosed homes as their personal time share network. Cars too. Airplanes… why not? And if they only want to offer 4% of their HAMP qualified distressed homeowners loan modifications… just shut up about it, would you. We should all be damn grateful that the number wasn’t three percent.
Look… the banks are obviously in charge and the administration is powerless… or at least spineless… to make them do anything. As an example, I recently learned that IndyMac bank, now One West I think… CHOSE not to participate in the President’s HAMP program. They CHOSE not to? They were given a CHOICE? Seriously?
It’s been some time and my memory has been known to play tricks on me lately… like I can’t for the life of me remember why I voted for Obama… but IndyMac… hmmm… give me a minute… trying to place it… oh yeah… didn’t they used to be… what’s the word… that’s right… BANKRUPT and seized by the FDIC. And didn’t we… the taxpayers… just take an $11 billion hit as a result. Am I off by a billion?
And yet they were given a CHOICE as to whether they’d wanted to participate in HAMP? Of course they were. Here’s a letter I received yesterday from a reader:
Dear Mandelman…
My Aunt Jane has a home loan with Indymac Bank/One West. It is a high interest rate loan with a minimum payment due of $2900 per month.
Her husband passed away in March, leaving her with only $1465 social security income per month, and we have been trying to get Indymac Bank to consider her for a loan modification since March of this year. They have lost the package and continue to stall because she is keeping the payments current. She has exhausted all of her savings in doing so.
Indymac has said her request is “in review.” It has been “in review” since April, and no one can tell us when (or if) they will get to it. I finally was able to get Sharon Gardner at One West Bank to tell me that “it helps for the customer to be delinquent.”
It is a travesty that these banks take bail out money from folks like my aunt, and then will not even return calls when she is attempting to work out a payment she can afford. She does not want to lose the family home, which she has owned for over 30 years. Indymac/One West is forcing her to ruin her credit, and then there is still no assurance they will look at modifying her loan.
If anyone needs to be helped in times like these, it is an 80 year-old lady on social security who just lost her husband.
Your voice is strong and is respected. Can you help us?
Well… I’m sure going to try, but we have to be realistic here. If the home is nice and in a good location, there may be an Indymac executive that’s interested in using your aunt’s home… and after all… bank executives do come first.
As it should be.
Your comments about IndyMac and their brethren are well placed but possibly lacking a sufficiently severe call to violence.
That said, I would like to tender a portion my firm's direct experience representing homeowners on the battlefield as it currently exists, skirmishing either directly with bank representatives or in the court of law.
First a couple of ("facts") Please note that the name IndyMac/OneWestBank is included on the MakingHomeAffordable website list of program member mortgage servicers.
Also, on the FreddieMac Website (Freddie is the administrator of MHA on authority from Treasury) the program guidelines state that a servicer must consider a modification to any qualified borrower prior to foreclosure
One of our IndyMac clients earlier this year received a modification from
the bank, executed it and tendered a check for the stated payment.
The check was later returned and the client was notified of the foreclosure date. A St. Louis County Judge issued a restraining order against the foreclosure pending litigation.
But it gets better....Last week IndyMac belligerently refused to consider a modification to a qualified client with a 9/16 Foreclosure Sale Date. A restraining order will be filed for on Tuesday and we expect it to be granted on the basis of
"An MHA Member Servicer has refused to comply with their own MHA guidelines that require that they consider a modification to a qualified borrower prior to foreclosure."
Now, if you think about the implications, this is really uncharted legal waters.
Oh, obviously we are not in California where I assume it would be illegal to advocate on behalf of the client's interest. Unless, of course, your client is the bank.
Once again, people are making statements and assumptions without considering all the facts.
HAMP and other programs have guidelines that also state that the servicer MUST comply with the Pooling & Servicing Agreement for the non-Fannie Mae and Freddie Mac loans. If the loan was securitized through Fannie Mae and Freddie Mac, then the HAMP program takes priority.
I suggest that people read the PSA's before jumping to conclusions. In the case of Indymac's PSA's, it states that the only way that a loan modification can be done is for Indymac to buy back the loan from the Issuing Entity, which is the Indymac Series xxxxx. I.E. the investors. If they do not buy the loan back, then they need not do the mod.
My attorneys have noticed one thing. When they file the TRO to stop the auction, then the attorneys representing Indymac will usually begin to talk modification, rather than fight the court action.
Why can Indymac do this under these circumstances? They are probably using funds from the over-collateralization of the Series to make up the income stream to the investors for the mod.
Now, if you did not understand this, it is time for you to start reading up on the whole securitization process, and learning how it really operated.
Thank You Paul. We appreciate your clarification as to why IndyMac (and the other HAMP servicers) are technically justified, in certain circumstances, to deny modification offers, and we have no doubt that you are absolutely correct.
Although the specific parameters of the economic and legal environment for homeowners are changing continuously, the goal of our firm remains constant.
Born from the universal instinct and need to survive our mission is to guide our clients away from an indefensible untenable financial position to a reasonably fixed and viable financial solution, whatever form that takes.
Before we accept a client we must reach a concensus on 2 points in order to proceed.....
1) The worst case scenario is "what they are doing now" and
2) We ain't "never givin them another nickle" unless they make a deal.
Wow impressive comments on why banks don't modify loans. What I wonder is if modifying the loan will benefit the investor more than foreclosing would isn't there some kind of clause some where in those boring pooling and servicing agreements that states the servicers should act in the best interest of the investor and wouldn't saving them thousands to hundreds of thousands of dollars be in the investors best interest I cant imagine how they can have so much money they don't mind losing some and screwing the economy at the same time. I do know that Wells Fargo as the investor on a loan will not even consider modifying why isn't any one screaming about that? They took taxpayer money they took over another bank with the help of the government. Someone please tell me why are they allowed to get away with all of this ? Why are elected officials passing bills to make helping people fight back illegal? How many people need to testify in front of Congress to what is going on and giving them documented examples before they will become enraged at how the Banks are basically running them? It must have to do with money the same money we bailed them out with. I feel sick can someone help me understand?